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for stainless
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CONTINENTAL SEUJNG PRICES: AUSTRIA
No. 28,804.
PUBLISHED IN LONDON AND FRANKFURT
Monday June 21 1982
i ■ I' Jj
***30p !
steel
samson
colnDrook 3131
Seh. IS; BSSIUM Fr3S: DENMARK Kr 8 SO; FRANCE Fr 5.00; GERMANY DM 2.0: ITALY L 1.000; NETHERLANDS R 2.25; NORWAY Kr 8.00; PORTUGAL Tir rilf T Tut/vf' " SWEDEN Kr 6.00; SWITZERLAND Fr 2.0; EIRE SOp; MALTA 30c
m:\\s simmakv
t
GENERAL
» e Gibraltar
in * yarhe,. - "
SS5 border
BUSINESS
r.LrV.e' ?i P * 1
* -k
reopening
doubted
Financial
scandal
threatens
Italy
• BANCO AMBROSIANO affair
culminating in the death of
Spanish ministers. They rhriat 13 ” Roberto Calvi, is
*t a t Hcfc th A »h.a n i!j threatening to prove Italy's
biggest financial scandal since
the Smdona empire collapsed
in 1974. Back Page *
-Doubts over Friday’s scheduled
3 sq „;• «> reopening of Gibraltar’s border
• S3 ■- with' Spain arose in Madrid
Hi-. among Spanish ministers. They
- ^ also put at risk the scheduled
-Jr*-"' simultaneous Anglo-Spanish
• r .1 ^ V talks on the Rock’s future to
s be held at Sintra, PortugaL
.4 K-’nio. ' is ; understood Spain will • REALIGNMENT of the Euro-
»j “•.-‘4^°^ . a “ undertaking that pean Monetary System took the
"t'. Rc ^ i ^Britain anil discuss sovereignty, immediate pressure off the
c . , J!' J *r tt» when their foreign ministers French franc and -Italian lira
in .£ u «mbou^ ; today to last week. Both currencies
s EEC-member- were devalued, leaving the
Belgian franc looking increas-
ingly vulnerable to renewed
speculative attack. Brussels
.. ■' ' J ‘ -oarliflmpntarv innmnr im/. and Enr0 Bel “ ia O f«nc interest
as strasr rer^s
5 5 within its alarm bell divergence
limit. Most concern centred on
the dollar’s strength against all
EMI members. The French
franc and lira fell to record
lows against the dollar in spite
of central bank suoport. and the
U.S. monetary policy
changes considered
BY ANATOLE KALETSKY IN WASHINGTON ' If'
THE REAGAN Administration tween the president, the con-
is considering far-reaching gress and the Federal Reserve,
changes in U.S. economic The Federal Reserve' is form-
policy, wHh particular emphasis ally independent of the presi-
on the Federal Reserve system's dent,’ although it is answerable
methods of monetary control, to Congress.
Mr Donald Regan, the Treasury
Secretary, and other senior
Administration officials revealed
over the weekend.
• A series of disclosures on the
re-examination of economic
On the other hand, the
president is elected by all the
people, and ~ he has a right to
put his policies into being and
to be held accountable for
.. them.” Mr, Beryl SpririkeL the
policy began when Mr Regan Treasury Under-Secrerary for r i<r
said at a Washington Post lunch Monetary Affairs, said on Satur- wider fluctuations in interest
that he concurred with the pre- day in’ a separate milieu. “-Since rates,
vailing view on Wall Street that we have been here, we have not
the kind of monetary
The monetarist faction in the
Administration has been calling
on the Fed to tighten its pro-
cedures, and retain its present
monetary targets.
Among procedural reforms
suggested have been n new
system of reserve accounting for
banks and stricter control of the
amounts of reserves which the
Fed provides to banks. The- Fed
has argued that such reforms
would probably lead to even
n' 3 j. r : ship bid. Page 2
‘2* v. '• r v t . • • ■
• IJfc-jPSA Inquiry
~ r ***&*-,
•--.o-h Lj*! 5 restarts today. An inquiry into
h* PSA fraud and corruption was
' ^i.-under way earlier. Back Page
)Od
Tube disruption
I':
A complete shutdown of
-.T.OV. iMjjK; ;.
•’^WS g -
y; : ■ London’s Underground is likely J^Mark was at its lowest against
today. in a dispute over dme-
|;; Sables. Page 9
r . ; :- 4 ?Wf:'Health pay talksr
•r 2 P 'i!S ? V Th e Goveriwnent meets National
Health Service trade union
“'-•f-v leaders today. It is widely
: ; ;; - expected to improve itspay offer
."••’4- a!i in advance of the 24-hour strike
set. for Weduesday.-Page 9
the U.S.
August.
currency since last
: •’ :sa •
•■v'.'rttrl jj;
«' ■ sr F-.
■ :•.??. iZ3"5;’
- : •jl:
• .• ..-."jfiaF
li: os
:s. viir
. xrcssd
newer
Dockyards row
Dr David Owen was accused by
the Transport and. General
Workers Union of. t lying to set
dockyard workers against, each
other and urged .to. r-e&gn his
seat. Page.-i» • '.c .-,vJ -
EMS June 18, 1982
3%
2 % —
iv-
o— PMga
Fraud warning:
The . pubD.c risks .-fraud . and
^bezzlement in deaUngs VfUh
\ small buildlhg soaelies, says -a,
J .rZ . ;• report by an - Institute . of
Chartered Accountants commit:
r : "'//// fte- set up : after’ the Alfreton
;-p’ Building Society case; Page 4
“ • • • %l ‘• l "- * . ....
: : ; 4 ^^Scarm an approval
-'-'rrvLord Scarman welcomed the
• ^ launching of Black JRights UK
! *• : ::Jr ■ . a’t its inaugural meeting. The
■ ' v-- ^° U P seeks a Bill of Rights.
- r : Ulster blast
An Ulster Defence Regiment
Captain who lost both legs in
*-fcaCrbomJ> blast at Armagh in
the. third IRA . attack over ,the
Weekend was still seriously ill.
Keconciliation
3^ousands of Liverpool Orange
Lodge members took part in a
service in the .city’s Anglican
i -cathedral for the first time in 50
^f?ars. It was for reconciliation.
Le Mans winner
'35cky "IcKx of Belgium . and
.^jerek Bell of Britain won the
Le .Mans 24rbour endurance
skcH in' a Porsche 950T.
5%
, ECU
MVBH2BCE
^PCCILJU:
- •UBSi-"
Ui
i Z
The chart shorts tha two constramts
on European Monetary System exchange
rates. The upper grin baaed on the
weakest currency, in the system defines
the cross rates from which no currency
(except the lira f may move more than
A par cant. The lower chan gives
each currency's divergence from the
“ central rate " against the European
Currency Unit (ECUi itself a basket
of European currencies.
• COSTA RICAN external
bond proposals could ser a pre-
cedent for treating Eurobonds
in international debt reschedu-
ling. Back Page; International
bonds. Page 17
• SWAPPING NEW SHARES
for outstanding corporate debt
is a craze sweeping through U.S.
boardrooms. Page 17
O SECURITIES SELECTION,
based in Bermuda, today
launches a managed currency
fund — Forexfund. Page 14
• MESA PETROLEUM, Texas
oil company, abandoned its bid
for Cities Service, removing a
major obstacle to the latter’y
acquisition by. Gulf Oil. Page 18
the next move in U.S. interest
rates was more likely to be up
than down. Speaking on the
record, Mr Regan declared that
the Administration could not
“ just. . stand there “
unchanged pqlicles. if
ployment and interest rates
remained high.
Although President Reagan
has repeatedly said he would
not' “print more money” to pull
the U.S. economy out of reces-
sion, statements such as that of
the Treasury Secretary may
indicate that the President’s
desire to see interest rates fall,
and economic activity pick up,
may how be gaining the upper
hand. • •
Mr Regan said that,- with infla-
tion under control and after
congressional agreement this
month on a budget programme,
there was nothing but monetary
policy to explain the continua-
tion of high interest rates. '.
The recent sharp fall in the
price of gold, . a traditional
hedge against inflation, showed
it was not the markets’ fears
about inflation which Was driv-
ing interest rates up. he added.
The Treasury was studying
actions of other presidents in
similar circumstances. - Mr
Regan said. This, according to
officials, was a reference to the
constitutional relationship 'be-
gotten
policy we asked for.” he added.
The Federal Reserve has been
strongly criticised by Mr
Regan. Mr Sprinkel and other
with -Administration officials this
unem- . vear - but there are sharp dif-
ferences of view within the
Administration about bow
monetary policy - could
improved-
- Although such reforms might
improve the Fed's ability to
make money grow along a nar-
rowly defined path in the very
short term. Fed economists
believe that short-term monetary
fluctuations have no economic
significance.
Mr Regan hinted that it was
!be 'this kind of procedural change
he would be seeking “The
Certain officials believe that Fed’s policies are correct It is
the Fed has failed by allowing their practices that are leaving
monetary growth to fluctuate too
erraticallv outside iis target
range. This is alleged to have
created uncertainty and has led
investors to question the
strength of the Fed’s determina-
tion to reign in monetary ex-
pansion. According to Mr
Sprinkel and other hard-line
monetarists m the Administra-
tion, all this ’ has added
premiums for uncertainty and
inflationary fears to what would
otherwise have been much lower
rates of interest.
Other officials have argued
that toe Fed’s preoccupation
with quantitative monetary
targets is the real problem. They
would prefer the Central Bank
to return to concentration on
ibe level of interest rates. Some
believe that the. counter-
inflationary impact of present
monetary policies could then be
maintained by a reform of the
dollar to a gold standard.
a lot to be desired,” he said.
But. other officials have sug-
gested that the Administration
would only be interested in a
change in Fed policies which
result in a reasonably quick
fall in interest rates. Con-
gressional advocates of a change
in the Federal Reserve’s -consti-
tutional independence have
advocated either an easing in
monetary policy or a return to
the gold standard, with the Fed
concentrating on maintenance
of a reasonable level of interest
rates.
Mr Paul Volcker. the Fed’s
chairman, told Congress mem-
bers last week that any Fed
actions to ease mbnetarv targets
would result, at best, in a fall
in interest rates only for the
short term. In the longer term,
it would aggravate fears of
inflation and cause interest
rates fo rise.
agrees to join
BY JOHN EDWARDS, COMMODITIES EDITOR
World Cup • UK OFFSHORE oil supply
England ” beat Czechoslovakia - boat operators needs fear no
2—0 -to ‘ qualify for the second ; protectionism from Norway,
sfage.- West Germany beat Chile shipping’ Minister Iain Sproat
4*-l. : . \ said after talks in Oslo. Page 3
• MERSEY DOCKS and Har-
"bour Company is to withdraw
its cargo-handling operations
for conventional liner services
from Birkenhead. Page 4
Briefly .. -
National Scrabble champion ts
L -iL-‘- accountant Russell Byers with
record 1,620 points in -three
' ~. r i^| .games - against - different players.
CJS '^ ^Cucap Week starts.. Thames
r.-- .TV’s Help programme will seek
^volunteers to befriend ■ ihe
, ,.3 -ntentally handicapped.
British free-fall record' set by
27 members of • ' RAF Sport
Parachute Association ' -who
linked up.
StatUe of Liberty needs urgent
Restoration.. Men ’and. Matters,
eage'ia
' CONTENTS
• GOVERNMENT’S CO-
OPERATIVE Development
Agency is seeking to second
from big companies four execu-
tives with marketing and
accountancy experience. Page 4
• HOMEFAST, a private parcel
service starting today, could
cause a 35 per cent decline in
Royal Mail deliveries, says a
Post Office report Page 4
France: After, devalua-
&GD ^
personal computers: After
Ip'^-ftiie Klondike- 13
■Tecjuioiogy: Defence elec-
> ironies needs more cash 10
^Management:: Why Bendix
i;S is set on constant change 10
Lombard: Police and the
community 13
Justinian: Lord Denning
and his pet aversion ... 8
Editorial comment: The
; Militant report; how India
earns aid ■■■ l 2
Surveys:
Hong Kong inset
;Arts
Appointments UK
Intimations) ...
*M 8 : Rstn.
Building Notes ...
Bub ' man's . Diary...
(Company ^ Now* ...
Crossword
Entertain. Guide ...
TauxMnsrkets- i
financial Diary ...
insurance
IT Inti. Co- New* ... 18
7 Inti. Cap. Mariiels 17," J*
-18 ' Lex
14 : Labour — -
15 . Leaden
9 " Letter*
14. Lombard
11 Management
II.. 1 Men a Matt«* ■
20 Money fk Brchngs.
IS ' Ovens as News ...
7 ' Parliamentary Diary
24
S
12
13
13
10
12
2D
2
IS
Racing' *
Shore Information 22. 23
Technology 10
TV and Radio 8
UK News ! 4. 5. 7
Unit Trusts 21
Weather M
World Stock Mku. 18
World Trade 3
-PROSPECTUS ADS.
Feraxfund 6< 7
Banlox Holdings .. 14
For latest Share Index phone 01-246 8026
MALAYSIA announced yester-
day that .it was prepared, after
all. to join the proposed new
international tin agreement
between producing and consum-
ing countries that control the
world’s tin market
But it is insisting on the
formation of a separate pro-
ducers-only association. This
may well upset consumer coun-
tries already concerned by the
militant stance taken recently
by Malaysia.
’The International Tin Agree-
ment is the oldest commodity
to have acquired more than
40,000 tonnes of tin— about a
quarter of world annual con-
sumption. Tin prices in London
on Friday were at their lowest
for five years — about £1,000
below the Straits tin price.
Malaysia’s ■ decision to join
means the new agreement could
come into force on July 1,
allowing the buffer stock to
continue operating and more
stringent export controls to be
introduced.
Dr Datuk Seri Mohammed
Mahathir, the Malaysian Prime
pact It regulates ^te market by Minister, announced in Kuala
use of a buffer stock that buys Lumpur that his country would
up surplus tin and it will use take part in the new tin agree-
expori controls if necessary, to ment. But he added that
prevent, tin prices falling below Malaysia, Indonesia and Thai-
an agreed H floor.” - land, who con Uni about two-
Conversely. the buffer stock thirds of world tin production,
sells any holdings it has to pre- had agreed to the immediate
vent prices going through an creation .of a tin producers'
agreed ceiling. association because they felt the
The Strata tin price in hew tin agreement would fail
Malaysia is at the floor level in to protect their interests.
spite of sustained buying by the
buffer stock which is believed
Details of the association will
be announced on Tuesday — the
day before talks are to resume
in Geneva on implementing the
new tin agreement
The talks were adjourned
earlier this month when
Malaysia said it was uncertain
whether it was going ahead
with an agreement which had
been ratified by only 51 per
cent of consumer countries —
way . below the 65 per cent re-
quired for the agreement to
come into force.
The U.S. has decided against
joining and. so far. Russia and
several smaller countries have
also indicated they are unwil-
ling to join. Japan and the EEC
have said they will join,
although West Germany and
Britain are insisting on a clause
in . the agreement opposing
manipulation of the market.
This is a dear reference to
the mystery buyiofl group
believed to be acting on bebalf
of producer interest which
earlier this year pushed tin
prices to a record level of £9,000
a tonne.
Sale of BA’s Aeradio subsidiary
likely to be announced today
BY RAYMOND SHODDY
THE forthcoming sale of
British Airways’ profitable In-
ternational .Aeradio subsidiary
is expected to be announced
formally in the Commons to-
day.
Bnt it looks increasingly un-
likely that other BA sub-
sidiaries will be sold before the
airline as a whole goes to the
private sector.
Mr Ian Sproat the Under
Secretary of State for Industry,
will tell MPa, in a Commons
answer, that the - Government
has been told that BA Intends
tb sell International Aeradio.
He will give no further details
on the grounds that it is a. mat-
ter for British Airways and that
it is too early to say.
Nonetheless, a memorandum
— in effect a prospectus — on
Aeradio International is likely
to be sent to interested com-
panies later this week. The
company makes air traffic con-
trol systems and manages air-
ports in the Third World.
The decision to offer it for
sale by tender to private com-
panies was taken after specula-
tors made high short term
profits from the recent sale to
the public of shares in Amer-
sbam International, the radio-
active medical products com-
pany whose disposal caused a
major row In the Commons.
S. G. Warburg, the merchant
bank, was asked to draw up the
memorandum, which will go to
more than 30 companies which
have written to express interest
in buying International Aeradio.
The interest came although the
company had never been form-
ally offered for sale.
The companies include GEC,
Racid. Plessey, Grand Metro-
politan and BAT Industries in
the UK, Siemens in West
Germany, Philips in Holland,
and Litton Industries in the
U.S.
International Aeradio is also
involved in air timetables and
maps, weather forecasting and
hospital management It made
pre-tax profits of £6.3m .on
revenues of £134.7m in 1980-81,
and has been consistently profit-
able since it was founded in
1947.
It is believed there was
government pressure for other
BA subsidiaries to be sold to
help reduce the airline’s deficit,
which is approaching flbn. The
subsidiaries included British
Airways helicopters, British Air
Tours and Sovereign Holidays.
Mr Sproat. however, is now
thought io be prepared to tell
the Commons that he has not
been consulted by BA on any
other sale plans by BA. The
airline said a« the weekend i-t.
had no plans fo sell other sub-
sidiaries- ,
Duncan Campbell -Smith adds: ,
S. G. Warburg is already pre-
paring the selling prospectus for
thp Government’s next major
project for the private sector.
This is the sale of BritoiL the
company which has taken oyer
the exploration and production
interests of the British National
Oil Corporation. The Govern-
ment's- target date for a public
flotation is still believed to be
November at the ear lies! -
Warburg is acting on behalf
'of the Department- of Energy
as the seller, but Brftoil itself
is - being advised by N. M.
Rothschild, the merchant hank
which' advises BNOC and has
played a lead manager's role in
earlier flotations of public
sector -companies, most -recently
Amershara Intern ationaL
Warburg said yesterday that
its own role as lead manager
in the Britoil issue had been
understood clearly since an
anouncement to that effect four
months ago by Mr Nigel Lawson,
tbe Energy Secretary: Never-
theless, the bank was working
closely with N. M. Rothschild
on the text of the prospectus,
and Bri toil’s banker was pro-
viding background details.
No decision on the pricing
.strategy to be used in the case
'of Britoil was likely to be taken
until much nearer the launch -
date, said Warburg. An offer
by tender remained one option,
but a final decision might come
only days before the launch.
Last isle
captured
by UK
forces
By Hugh 0*Shaughnessy in
Buenos Aires and Andrew
Whitley in London
BRITISH forces recaptured
yesterday the last Argentine
personnel in the South
. Atlantic waters. A small
number of Argentines on the
Thule Islands, in the South
Sandwich archipelago, sur-
- rendered without a fight to a
.British landing party.
The Defence Ministry In
London said the surrender
took place at L30 pm London
time yesterday, bnt full
details were still awaited.
Argentina has protested that
British helicopters fired on
. unarmed civilians at an
Antarctic research station.
In Buenos Aires, the three-
man military junta was due to
meet again yesterday, for the
third day in succession, to try
to agree the appointment of a
new President, following the
departure of Gen Leopoldo
GaJ tier! on Friday night.
Gen Alfredo Saint Jean, the
Interior Minister, is exercis-
ing the duties of President
while the three armed
services quarrel over policies
and who should lead the
country.
Gen. Caltieri’s successor as
commander-in-chief of the
army. Gen. Cristino
Nieolaides. was reported to
he pressing hard to take over
as bead of state, with a
guaranteed fire-year term in
office and carte blanche to
pnrsne conservative economic
policies. Bnt his extreme
right-wing views have pro-
voked hostility among more
moderate generals. -
The Argentine air force,
which acquitted itself well In
the Falklands campaign, is ■
united bbind the candidacy
of its commander-in-chief.
Brig. Basilio Lami Dozo, for
the presidency. He appears to
he gaining support also from
some admirals. Brig. Lami
Dozo. who would be Argen-
tina’s first air force president. -
Is committed fo a rapid re-
turn to civilian rule and early
measures to reflate - a flagging
eeonomy.
For its part, the anny,
smarting from criticism of its
conduct in the way and from
tbe overthrow of Gen.
Galtieri. wants - , to see Brig.
Lami Dozo and Adm. Jorge
Anaya, the navy commander-
in-chief, also purged, lest the
land forces be seen to be
hearing too much of the blame
for the Falklands debacle.
Continued on Back. Page I
Begin urges peace
force for Lebanon
BY DAVID LENNON IN TB. AYIY AND ANATOLE KALETSKY
IN WASHINGTON
MR MENAHEM BEGIN. Israel's
Prime Minister, claimed yester-
day that there was no difference
between his views on the
invasion of Lebanon and those
pul forward by President
Ronald Reagan.
Mr Begin, who was speaking
on television in the U.S.. is due
to meet Mr Reagan in Washing-
ton today,
The Israeli premier said his
troops would leave Lebanon,
but only after “ the scourge of
terrorism ds stamped out.”
quoting a comment made in
London by Mr Reagan.
Mr Begin said that to assist
in this objective an inter-
national peacekeeping force
would be needed to control the
25 miles of Lebanese territory
north of the Israeli border.
This force could not be under
the control of what he
described as the UN “Insecurity
Council.” He said each con-
tributing nation would have to
make individual, detailed agree-
ments with the Israeli and
Lebanese governments.
Sporadic fighting was reported
yesterday from around the
Lebanese capital Beirut, where
several thousand Palestinian
guerrillas and Syrian troops
have been encircled by Israeli
forces for several days.
Thousands of people continued
to leave the western part of the
city yesterday.
Mr Philip Habib, the U.S.
special envoy, is continuing bis
meetings with Lebanese leaders
in an effort to forestall an
Israeli assault on the capital.
In Israel the Cabinet has
totally rejected U.S. efforts to
persuade it to negotiate with
the Palestine Liberation Organi-
sation on either a PLO with-
drawal from Beirut or on the
future of the Palestinians livine
in the occupied West Bank and
Gaza Strip.
This emerged from a state-
ment by Mr Dari Meridor, the
Cabinet Secretary, a Her a
Cabinet, meeting yesterday
which heard reports on the
military and political situation
in Lebanon.
The Cabinet was informed
that Mr Habib had not made
any progress on devising an
arrangement ' which would
resolve tbe tension caused by
the Israeli siege of Beirut.
Mr Meridor said that Israel
would continue to observe the
ceasefire, as it had done since
Friday. June 11. He said that
references to a 48-hour cease-
fire over the weekend had no
relevance, neither did any talk
about extending it.
But the continued build-uo of
Israeli forces encircling Beirut
and the weekend clashes be-
tween Israeli, Palestinian and
Syrian forces indicate that a re-
newal of full-scale warfare is
still possible.-
The Israeli Cabinet also heard
of preparations the Palestinian
guerrillas are said to be making
to renew the fighting in the
Beirut area. The most worrying
report - was of a build-up of
thousands of guerrillas, together
with volunteers from Iran and
Jordan, beside Aley, a town 15
kilometres east of the Lebanese
capital.
The ministers were apparently
told that if the build-up and
sporadic attacks on the Israeli
forces continued, the Cabinet
might be called into session
again this week. This can only
be interpreted as meaning that
in those circumstances Israel
will renew its massive attacks on
guerrilla concentrations.
The Cabinet was also told that
the U.S. would support a pro-
gramme for the gradual with-
drawal of Syrian forces from
some part of Lebanon, but not
from all areas and definitely not
from the Beka Valley area of
eastern Lebanon.
Ministers were also dis-
turbed to learn that the Ameri-
cans would support a continued
PLO presence in Lebanan — as
a political rather than a mili-
tary organisation — something
which runs contrary to Israel's
secondary war aim of destroy-
ing the political power of the
Palestinian organisation.
EEC governments have mean-
while sent a detailed series of
questions to Israel in an attempt
to secure a clear statement of
its objectives in Lebanon.
Foreign ministers meeting in
Luxembourg yesterday were
attempting to prepare the
groundwork for the next state-
ment on the situation.
Th® Ten orietnallv condemned
»he Israeli invasion and called
for an immediate withdrawal.
The reply to the EEC question-
naire may. have an imnortant
influence on the stance that the
Community will now adopt
EEC officials make no secret
of the ' difficulties . the Com-
murritv h,- having in frying to
co-ordinate a policy line with
the U.S.
Ha vine witnessed the obvious
fury of Mr Alexander Haig, the
U.S. Secretary of State when
news of the Israeli invasion
reached the Versailles summit
two weeks ago. EEC foreign
ministers are surprised at the
way the Reaean Administration
has so nuicklv succumbed to it«
dnTTiPstic Dro-Israeli lobbies and
avoided taking any sanctions
ay»«nsT Jerusalem.
Saudi Arabia warned at tbe
we®kend that the Arab coun-
tries would erercise the>r risht«!
of territorial defence if Israel
attempted to enter Beirut.’ The
warning was issued after talks
between thp Saudi and Syrian
foreign ministers.
\ -v.. Viair V •
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PHASE 2 Watermans Park
PHASE 3 Goat Wharf
PHASE 4 Fenry Wharf and Lots Ait
PHASE 5 Marina
2
III
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CHARTERS! SURVEYORS
OVERSEAS NEWS
Syrians resisting
Israeli pressure
Doubt over
President Reagan expands ban on provision of oil and gas equipment
reopening
of Gibraltar
U.S. sanctions worsen transatlantic tension
to quit Beirut
border
BY PAUL CHKSERIGHT, WORLD TRADE EDITOR
By Tom Bums in Madrid.
BY PATRICK COCK BURN IN DAMASCUS
SYRIAN soldiers will not be
withdrawn from Beirut under
Israeli pressure Ur Ahmed
Iskander Ahmed, the Syrian in-
formation minister, said yester-
day. He added that Syria could
also not comply with requests
for a troop withdrawal from
Lebanese President Ellas Sarkis
because he was surrounded by
Israeli soldiers and not a free
agent.
Clarifying reports of a new
strategic agreement between
Syria and the Soviet Union, up-
grading tiie existing friendship
and co-operation treaty, Ur
Iskander said that Syria wanted
such a new treaty but nothing
has yet been sigsoed.
The Syrians feel that Israeli
military successes, particularly
the destruction of the Sam anti-
aircraft missile system in the
Bek a a Valley, are the result of
the U.S. providing Israel with
its most modern weapons.
“The most sophisticated arma-
ments in the U.S. are tested by
the Israeli leaders, 11 Ur
Iskander said.
Syria clearly wants compar-
able weapons systems from the
Soviet Union, but there are still
no signs that Moscow is pre-
pared to provide these. Under
the present treaty the Soviets
have guaranteed Syrian terri-
tory against Israeli attack, but
this guarantee does not ex-
tend to Syrian, forces in Leb-
anon.
The Syrian belief that Presi-
dent Sarkis is acting under
duress will make it extremely
difficult for any tong-term agree-
ment involving the Lebanese
Government to be worked out.
“ Israeli tanks are close to
Babda Palace where President
Sarkis lives,” Mr Eskander said
yesterday. This prevents the
Lebanese leader taking any
derision independently, he
ctaimedi
Iraq has started to withdraw
its troops from the remaining
Iraian territory it occupied at
the start of the Gulf war, it was
announced in Baghdad yester-
day. The Iraqi News Agency
said the withdrawal would, be
completed in 10 days. Iraq has
suffered a series of major mili-
tary defeats this year and on
June 10 made its first offer of
an almost unconditional with-
draws L
It seems that Iraq has now
decided to go ahead without
receiving auw indications from
Iran that it is willing to nego-
tiate a peace treaty. Iraq
announced a unilateral ceasefire
10 days ago.
In the past, the Syrians have
always said that they would
leave Lebanon, which they
entered in 1976, to end the civil
war if President Sarkis asked
them to. They now apparently
regard the Lebanese administra-
tion, which is almost entirely
without executive authority, as
Israel's chess pawn.
Yesterday's Press conference 1
was the first given by the Syrian i
Government since tire Israelis
invaded Lebanon over two
weeks ago. Damascus has made
little effort to explain its poli-
cies to either the media or to
foreign ambassadors. Diplomats
ascribe this reticence to the
Syrian Government's inability to ,
decide its best course of action.
Ur Iskander gave no indica- 1
tiort that the ceasefire between i
Israel and Syria, was expected
to break down, but the Syrians '
are clearly hopeful of greater
support from the Soviet Union.
So far the only foreign troops
to arrive are from Iran. Some
2,100 of these are believed to
have reached Syria, but only a
small number are in Lebanon.
w-.r/bd
Lebanese man argues with Israeli soldier as hundreds try to
head back to South Lebanon
Unions in Lisbon protest
over tough economies
BY DIANA SMITH IN LISBON
PORTUGAL’S trade unions
have reacted angrily to hefty
increases in energy prices and
a wage freeze that followed last
week's 9.4 per cent devaluation
of the escudo.
The communist - dominated
CGPT union confers tion has
threatened “widespread labour
agitation” early next month. In
February and May, it called
general strikes, but they
received only partial support.
The noPHeommunist unions are
also protesting.
At the weekend, Sr Joao Sal-
gueiro. Foreign Minister,
announced across tive board
increases in the prices of aR
oil derrvitives with petrol rising
to Es62i a litre (£1.72 a gaHon).
a 7 per cent increase. Portugal
imports about 8m tonnes of oil
a year.
Sr Salgueiro also declared a
■ freeze on -all wages and prices
until the end of July, promis-
ing particularly strict checks on
the prices of essential goods. He
also called for intensive energy
saving efforts and said that the
Government would offer new
incentives to energy saving pro-
jects in industry. I
Portugal’s wage earners are j
among the lowest paid in ,
Europe, averaging for semi- 1
skilled industrial workers about
Ecl5,000 a month. But their,
energy and food bills rival
European standards. The unions
have been clamouring for wage
increases that would re-establish ;
their buying power lost in Hast
year’s 25 per cent inflation.
The Bzdsemao Government
has imposed strict ceilings this
year on the pay of government
employees
Trudeau rejects controls
on wages and prices
BY RICHARD MACKJE FN TORONTO
MR PIERRE TRUDEAU, the
Prime Minister, has contributed
to the uncertainty about the
Canadian Government’s future
economic policies by rejecting
both mandatory controls on
wages and prices and the harsh,
monetary approach pursued by
Mrs Margaret Thatcher and
President Ronald Reagan.
However, he told a gathering
of Western Liberals in Banff,
Alberta, that the Canadian
federal and provincial govern-
ments must do something to
reduce the country's expecta-
tions and rising incomes
fuelling inflation.
The Prime Minister’s re-
marks came after a week in
which the Liberal Cabinet and
the federal caucus held long dis-
cussions about ways to deal wdth
the troubled economy. Mr
Aldan MacEacben, Finance
Minister, has premised a state-
ment on the economy
Canadian businessmen and
economists hope the statement
will indicate how the Govern-
ment plans to deal with the
apparently worsening national
economic problems.
Last week the value of the'
Canadian dollar declined to
77,37 cents (U.S.), a fall of
almost 2 cents. This occurred
despite a rise of basic interest
rates by three-quarters of a per-
centage point
LAST-MINUTE doubts by
some Spanish Ministers have
put in jeopardy the reopen-
ing of the GUbraltar border
and the simultaneous talks
over tire future of the rock to
be held in Sintra, Portugal,
between delegations headed
by Mr Frauds Pym and Sr
Jose Pedro Perez - Llorca,
Spain's foreign minister.
It is understood that Sr
Perez-Llorca would make a
final effort to obtain from Mr
Pym an undertaking on
Britain’* willingness to dis-
cuss the sovereignty of the
rock when both ministers
meet in Luxembourg today
during negotiations linked to
Spam's EEC membership bid.
Earlier optimism that both
the border opening and the
talks would go ahead as
planned on June 25 was over-
taken at the mid of last week
by what an authoritative
source called “ cold feet”
among certain Spanish, mini-
sters.
The ministers questioned
the wisdom of throwing away
Spain’s principal bargaining
counter in the vexed Gibraltar
- dispute by unilaterally lifting
the blockade imposed by
General Franco 13 years ago.
The doubts reflected poli-
tic nervousness in the
Government, which is reluc-
tant to aggravate right-wing
and military circles that have
consistently viewed the border
reopening as betrayal.
The uneasy relationship
between the Government and
conservative army 1 sectors
came into the open last Thurs-
day when two generals were
placed under house arrest
following a tense incident
with the president of the
court martial tribunal that
sentenced last year’s coup
rebels.
Unless Sr Perez-Llorca
returns from - Luxembourg
convinced that he will obtain
a .substantive negotiating
Haig steps
up attack
on Soviet
arms plans
By Anatote Kaletsky in
Washington
MR ALEXANDER HAIG, the
UJS. Secretary of State, Inten-
sified the Reagan Administra-
tion’s attacks on the Soviet
Union at a Press conference
on Saturday after two days
of talks in New York with
Mr Andrei Gromyko, ' Soviet
Foreign Minister. -
Mr Haig revealed that the
Soviet Union, bad started an
** unprecedented ” series of
strategic weapons tests. In-
cluding tests for nuclear war-
fare in space, within days of
Mr Gromyko's strong speech
in favour of nuclear disarma-
ment at- the United Nations
last week.. He said that tip
Soviet actions belied the
words put ' forward by Mr
Gromyko for the world
audience at the UN.
Mr Haig refused to discuss
the likelihood of a summit
meeting between President
Reagan and Mr Leonid
Brezhnev, the Soviet leader.
Officials In Washington have
indicated recently that an
autumn, summit, which had
been thought probable, may
now be in question unless
there is a good chance of tts
producing a “ positive out-
come.” Mr Haig said only
that both nations “agree that
summitry for summitry’s sake
is to be avoided.”
His denunciation of the
Soviet missile tests last week
— which he admitted had not
breached any treaty came
only a day after the. Reagan
Administration’s derision to
intensify economic sanctions
against the Soviet Union by
banning' sales of pipeline
equipment by European com-
panies -producing machinery
under -tieenee from UJ5.
manufacturers.
This, in turn, followed a
tougher than expected speech
by President Reagan on
Thursday at the UN special
session on disarmament.
Since President Reagan’s
return from Europe, the
Administration’s line on East-
West relations has hardened
noticeably. Before the trip,
the Administration’s first
priority had bean to calm
European fears about its
strongly anti-Soviet stance.
PRESIDENT- REAGAN’S deci-
sion to extend economic sanc-
tions against the Soviet Union
is likely to exacerbate transat-
lantic tensions over the wisdom
of East-West trade,- especially
because the nature of the deci-
sion was unexpected.
The unilateral move will open
old European wounds about U.S.
attempts to extend its jurisdic-
tion, raising sensitive issues of
sovereignty.
Following a meeting of the
National Security Council in
Washington last Friday, Presi-
dent Reagan expanded a ban
on -the provision of oil and gas
equipment destined for the
£4.5bn Siberia-West Europe gas
pipeline to include equipment
manufactured by the foreign
subsidiaries of U.S. groups and
those made outside the U.S.
under licence to American
companies.
At the end of last year the
U.S. placed a limited embargo
on the sale of U.S. goods to the
Soviet Union following the im-
position of martial law. in
Poland. Goods made in the U.S.
for tire pipeline were Included,
reflecting continuing U& con-
cern about what was seen in
Washington as growing Euro-
pean dependence on Soviet
energy.
.Tbc EEC’s reaction was
angry. Contracts for the- sale oi£
pipeline equipment . had been
signed, already. The effects of
the embargo would cut into well-
established trading links.
Further, there was some doubt
about bow much liberalisation
in Poland would be helped by
waging economic warfare on the
Soviet Union.
which: European governments
did not accept as valid.
By March, the U.S. seemed
to reconsider the issue. Ameri-
can officials privately conceded
that; in future, the emphasis of
policy -would be shifted from
goods to financial sanctions.
Attempts to win. European
acceptance for a system of
credit quotas ended in the Ver-
sailles (genomic summit confer-
ence eatjy this month with an
agreement that “ commercial
prudence ** would be exercised
In offering faoilities to the
Soviet Upion.
AEG-TELEFUNKEN, the
troubled West German group
involved In turbine deliveries
for the Urengoy pipeline, has
reacted bitterly to the U. S.
Administration’s new restric-
tions on the provision of UJS.
technology for the project
James Buchan writes from-
Both.
The U.S. case, in European
eyes, lacked conviction because
Washington was not prepared
to halt grain shipments to the
Soviet Union. It therefore
appeared to be asking Europe
to bear the bnmt of a policy
The impression was gaining
ground that the U.S. would
relax its oil and gas equipment
embargo to allow existing pipe-
line contracts to move ahead.
Hence the lobbying in Washing-
ton last week by General
Electric arid Caterpillar, two
U.S. groups involved on the
pipeline with a long record of
Soviet trading.
Indeed, Mr Shintaro Abe, tire
Japanese Minister of Inter-
national Trade and Industry,
was quoted as expecting a
relaxation in Washington at
least as far as U.S. parts for a
pipeline running EaSt towards
Japan from Siberia -were con-
cerned. - ’ .
, Certainly, the sudden stiffen-
ing of U.S. policy may delay
further the Siberia-West Europe
pipeline which, oxi the original
building. schedule, should have
come on stream in 1984,* but
which bad seemed likely,
because of the first sanctions
announcement, to be held up
for at. least a year.
, The basic technology for the
turbines and compressor sta-
tions, which push the gas along
the line; is from the U.S. The
European turbine-, manufactur-
ers with contracts — AEG-Kanis
of West Germany, John Brown
ftogjneering of Scotland and
Nuovo Pignone of Italy— are
In a statement released on
Saturday night,- the group
said the extension' of restric-
tions would have serious '
consequences for the group,
and. could endanger thousands
of jobs at .its- AEG-Kanis
subsidiary and among its
suppliers.
AEG-Kanis' won an order,
estimated to be worth about
DM 650m <£I5L8m)» for 47
turbines last MlhlTnn The
statement complained that the
order .was won long before
the administration Imposed
-its ban on U.S.-made com-
ponents at; tire, end of
December.
Count Otto Laminriorff^tiie
■ .West.:. German • Economics
. Mbdster, was eqnaQy sharp
is his criticism of tbededsion
. as based mi a dubious premise
and as „ setting - a ^serious
precedent
Speaking in Baghdad, hef
said - the y; administration's
. action raised questions about,
whether ihe U.S. intended^
take seriously the basic 1 priih
ciples of trade laid down, at :
Versailles and aboutthe very -
future - of ;-the- “ intcriutivnal^
division bf ( Jab€rnr7 T - V / ■
■ Count' Lambsdorff. has
always maintained that GE’s
near-mo nopoiy in' the- manu-
facture of rotors for turbines
was permitted by . a “eonr .
scions” derision. pfife com--
petitors as the market was so -
small. i-' ‘. e -‘-
ally,- the.ILS. Government could
exact penaWes fnw the TLS.
Santa : '^.'Eunqpeah' .companies
irahsgjreesing'j latest sanc-
tions decision.
The extension of the ban-
on rotor sets for the turbines
made by General' Electric of
the U.S. now covers such
European .’licensees as
Alsthom Atlantique of France.
It has, says the statement,
“ to all Intents brought to
nothing AEGrTeleftmken’s
efforts to forge a - West
European solution”- to the
pipeline problem.
• Tass, .the official ^Soviet
newsagency, eafled President
Reagan’s extension “of sanc-
tions “an. attempt to. turn
routine: trade into ah instru-
ment of. political b l aefc ma B,*?
AP. reported from Mosovw.
' It was, the agency mid, a
fresh move towards, building .
up tenshm:-. and. "upsetting
mutually beneficial business;
ami economic East-West co-
operation.” At the same time
the decision would aggravate
differences between the UJS.."
and West European countries,
Tass said.
manufacturing- - associates of
GE of the U-.S,
Also, the compressor manu-
facturers with- -pipeline con-
tracts — Demag of West :• Ger-
many. Creusot Loire of France
and Dresser France — use U.S.
technologly from. Cooper or
Dresser Clark.
Some smaUer equipment sup-
pliers, like Walter Kidde of
London -which are tielaeVed- Ip
have a contract fhrflrei*rotec-
tton systems, are 'direct' s&fcsod-
iaries of UJ3. groups, yf r-.-v, •
Although the Reagan Admin*
istrafion can stop . the /move-
ment of goods - am - tecfttoiojgy
from the UJ3. to 'such groups,
the degree to which ft-cjin.ex-
erase control], over . thein.^s :
more problematic.- ."The,oreti(>
- But -tbis yould, enflame the
dispute whitowiffsurely.start
. over -the U.S, decision to seek
coritad over the : foreign sob*
sidiaries cffuAmericm groups! “
■ UndertJ.S. tew;*foreign sub-
' sidiarica! of ' American groups
are defined as "'persons subject
_- : tbr.the jurisdiction of the’ UJ3, n
-This assertion is made : even
when the Shareholding of UJS.
'imerests is as tow as. 25 per
:‘fcenfc.>"_y '•
’ . ■ ; In Europe, /tins claim Te*aHy
' to control^ subsidiaries Is con-
: tested. -£t fe generally held tbit
the nationality- of a company is
-dictated .by. its“ place of .inau>
poration. 32ms, , except vrtiece
. ;there .is ; -an fdentity of policy
between the TJ.S. and a Euro-
rpean power, attempts by Wash-
ington teexatjurfediction over
a coanpahy. registered inEurope
to; seen.: ah . attack ■ on
i-sovaj^grhy-.- . .
, ‘ The isEue- has been a Irene of
: co nte nt ion ' -for- long. Over tire
last: year. British - and TLS.
i officials have sought an agreed
. definiUonfor the nationality of
;a ; qdsnpahy to order tot prevent
- dispute! It is on the agenda for
tate -wtochlfr Peter Rees, the
’’toaster for. Trade, will hold to
- Wa shin g t on. later this month.
The. atniospitere. for progress
towards such agreement had
seemed better this year than at
any ttoie over a decade. The
"U.S. had . shown its '■ sensitivity
by refraining from seeking to
: -apply. zts Lrbya sanctions policy
to subsidiaries.
:> c
y
f ’ u ' ;
7 i. But Prerident' Reagaii’s latest
move seems likely to bring to L
the-.; foreground a ’’ simmering
tissue, just at the time when
'trade "friction between the U.S.
.sodJheEEGbas readied a new
level of acerbity .over European
'Steel sales in' tito U^S. •
agenda when he meets Mr
Pym again on Friady, officials
said Spain was likely, to post-
pone the talks arid the border
re-opening. This would be the
second revised date for both
events. They were postponed
last April in the wake of the
Argentine invasion of the
-F alkland Islands. _- t '
To prepare Spanish public
opinion for the possibility,
most Spanish newspapers
published front-page reports
on Sunday saying Britain was ‘
tot;} no- mood, to negotiate'
Gibraltar sovereignty, and the
Conservative. Madrid news-
papers Ya and ABC edi-
torially called for a postpone-
ment.
Most
to be
prisoners jp
within days
BY RHMY BURNS IN BUEMOS^AIRES
Steel union | J^EC states r s ,
m talks bit stick tb line *
new contract t on veto v I HIS
NEARI*^ 7,000 xrf lli845 r welqome, they were Tbundled
Argentine prisoners -takeh on in^ fleets of anny. Imries and
the';' Fadklamf ' buses and -taken to'ati.unknown
expected 'back on the jAairitfand - destihatipm ; AT fflptir^ ^rffidal-
by today, as the repatriation dom had dearfy jf^ged it best
operation coxtiinues .? at .full, to Ikeep the humiUajiqn..’of the
swingT Brdtain ea^ lt wiH Aold 1 ? 1 oocaston out of the’EriieiighL •
about 1 , 000 -of the Trofessional-: .For the mHitary ; auifliprities,
about 1 , 000 -of tbe professions ,K> r the military- antiibri ties,
soldiers among the^POWs yntS the 'return of prisoners ' of war
Argentina agrees to a complete jg proving delicate in a number
. — e
cessation of hostilities. . of ways: no
The North Sea ferry Norland, doubt • that
with more than 1,200 prisoners generation >
of ways: no one here has any
doubt that the “ Malvinas
generation ’.’-—the' 18 to 20-year-
on board, was expected ; in old conscripts who -formed the
Argentine waters sometime , tor bulk of the army on the Falk-
day, after being temporarily lands— will in time have a lot
delayed at Port Stanley by. bad to say about the conduct of the
weather. Two Argentine, war. :
hospital ships complete the Some - of. the dirilusionment
flotilla t a k i n g the defeated army, an d anger. among the returning
soldiers is only now beginning
When the cruise liner Can- to trickle through to the Argeri-
berra sailed into the snuCU tine ptolic. Last Tuesday’s riots
Patagonian port of Puertb in. Buenos Aires sprung to part
Madzyn over the weekend from the frustration felt by a
carrying the first batch of 4,200 people duped for weeks by
prisoners, army troops took government propaganda.
great pains to seal off the sux- Taking advantage- of the raur-
rounding streets from the rent, chaos in the country’s
hundreds of people waiting to power structure, over the week-
greet them.
end Argentine newspapers pub-
After a brief and low-key tidied conscripts* accounts of
the -war which echoed what
had already been learned by
the British. 3210 - independent
news agency DW1- for instance,
reported that Argentine trbops
had suffered from poor rations
and to adequate logistic -sup-,
port - t:. TV: .
The present phase of the re-
patriation programme is -ex-
pected to be brought to a dose
within the next day or two when
the Canberra makes its second
run back from Port Stanley to
Puerto Madryn.
British offidals have indicated
that they are prepared to bring
the remainder back to Britain, if
necessary, as a bargaining
counter to use against the
Argentine junta, to force a com-
mitment to end hostilities.
In London, the Ministry of
Defence has denied claims
published to the Sunday Times
that seven members. of the SAS
are being secretly held as
prisoners in Argentina. U.S.
intelligence officials were re-
ported as sayjng that they had
been held for a month after, be-
ing captured in the Argentine
part of Tierra del Fuego.
By fUdni^temhartioNew York; '. Efy john V^M in Udindn|R|
LEADERS of the united, steel
workers of America axe ta hoW
talks’ with' major steel, "com-
panies that cotrid' Iead to a re-
negotfation of the .union's,- cur-
rent labour c o ntract This is
not doe to expire Until August,
1983, ' but} tire steel ' companies
have been pressing: toe • union
to agree to changes in view of
the serious recession to toe UJS.
steel industry.
At a meeting • on Friday,
union leaders , agreed, to hold
discussions " for the purpose of
exploring possible solutions to
the problems of our members
and the industry.”
The wording appears '.tp have
been kept deliberately vague
because of the strong opposi-
tion among many steel workers
to any suggestion of changes in
the labour contract
The level of: emDloyinent in.
steel making' has fallen to. its
lowest point stoce 1933. Out of !
about 400,000 workers - to toe
industrv, one third has been
Jnid off. The pressure, f or-
phan ees in the labour contract
follows precedents set by the
motor manufacturers, airlines,
transport and . . construction
Industries.
THE RIGHT of .todlvidiul EEC ....
■governments to block majority *' r --
decisions '' on vital issues ■'
-appeared to he afive add" weft '
-last .night-~iuitil a maiority .of - . .
'goveritoreuls again decided that - ■
a .veto .be overridden, : '■
ajj-toey did^last month -in tire a
majority vote against Britrin on ••
fanp prices. ; • -.
- This para^xicai ooncRisiqn
looked likely to emerge front i ; ■
disdission by EEC Foreign _■[_ ' t
14imsfers ui Luxemfconrg which i
was lannched ” to seek cLarific^ •
tfon” . following last xBontbAr v
farm price vote by tire Uj$»- J ’ >
Mr Francis Pym. - - - '• "■ *
^Tbeinajority vote had shared
Britton’s confidence in . ffcs '
ability to protect i m p or t ant
national: interests, said tire ' - '
I fioreagn secretary, who urged .a —
dear statement that the LuxanJ-
bonpg compromise of 1966 stiff "MG RE
uodezptoned EEC ■. decision-
Baxter cleared
in IBM case
By Our New York Staff
THE U.S. Justice Department
has ruled that there was no
conflict of interest to the de-
cision earlier this year by Mr
William Baxter, -toe Assistant
Attorney General, to drop a 13-
year old anti-trust case against
IBM.
As a -result, a Federal Ap-
peals Court has ordered a dis-
trict judge to abandon, his in- ,
guiries into the issue.
The question of a possible
conflict of interest arose be-
cause Mr Baxter had done con-
sulting work for IBM in a pre-
vious anti-trust case, and had
not disclosed the fact on his ap-
pointment last year .to the Jus-
tice Department
But last nag!rt*s discussions
mirrored the original political
settlement, of J ; 1966 in that
Ministers ; agreed to ■ disagree^
The ;I988 ecnapromise
based on toe document in which
France made it- dear that EEJ£
agreements should be unanjrl
mans once a member state saidt
that an important national itff
terest was at stake. The other
five Community members at tire"
time said that they would do
their best to estaSbfllsh unanintily'
on.- an . issue “ within a reason-'
able time.”
British and Argentine medical staff help some of the. more seriously wounded prisoners off
the Canberra when she arrived at Puerto Madryn over the weekend. They were met by grim-
faced Argentine officers who seemed close to tears. The prisoners, many to them teenagers,
disembarked to a subdued welcome marked by a lack to ceremony. The area appeared to
be totally sealed off to the public and no families could be seen
Turkey drops
prosecutors
Afghan rebels inflict heavy losses
. ANKARA — Military author!- 1
ties ; have- removed from- theto
PESHAWAR — Rebels In the
nigged Panjsher Valley north
of Kabul have inflicted .heavy
casualties on attacking Soviet
and Afghan Government troops
and seized large quantities to
arms from them, according to a
French medical team that
arrived to Pakistan from the
area several days ago.
The four French doctors and
a nurse said yesterday they had
been trapped in heavy fighting
in the valley, where they had
been ' working for several
months.
The valley has been the.
scene of several offensives
against anti-Government rebels
since mid-May which have pro-
duced of success by both
sides.
The group, four women and
a man, belong to a Paris -based
humanitarian organisation. Aide
Medicale Internationale.
They arrived in Peshawar,
capital to Pakistan's northwest
frontier province, on Saturday
after about two weeks' trekking
from Panjsher to the Pakistan
border and five days 1 stop at
the Pakistani border town of
Parachinar.
Dr Laurence. Lemonier said
the rebels were successfully
resisting Soviet and Afghan
troops when the group left the
area. Their .morale was very
high,, she. said.
Dr Lemonier said the rebels
inflicted heavy casualties on
Soviet and Afghan troops and
seized large quantities to arms.
. Describing the start of the
offensive, she said the Russians
landed commandos by heli-
copter in the centre of- the
valley and on mountainsides
before making a t&nk-supported-
advance.
She said toe rebels -shot down
several helicopters and. told her.
they had kiUed 2,300 Soviet and'
Afghan troops after 18 days to
fighting.
Civilian ■ casualties wore low
because the people left toe <
valley soon after the. offensive !
and took shelter in mountains^
she said.
Reuter ' -
posts 42 senior martial law
prosecutors -and judges, includ-
ing toe colonel who ted two
cases against Mr Rulent Eceviti
the former Prime Minister, toe'
official Gazette announced.
- CoibneL- Nurettm Soyer, who
-was attached to the Ankara
Martial Law Command as « hi«rf
prosecutor at two separate cases
against Mr Ecevit and for the
mass trial of the exreme right-
wing Nationalist Movement
Party, -is to be replaced by
Golondl Zefci Egto.
.Colonel Suleyman T&kked,'
.the Istanbul chief militar y
secular, who conducted the case
at toe trial of toe now banned,
left-wing Disk E^ade U&ion
Confederation - and at several'
other mas trials of left-wing
groups, was.aiso removed. ■ - -
There was no explana-
tion for toe reshuffle.' '
Reuter- ' :
. Last right the UK, Denmark.
Greece, France and Ireland aU
argued the -right to veto a
majority voteshpuld still stand.,
although Ireland wanted the
veto used sparingly and Fiance
with opt any “unfair" linkage of
the kind Britain was alleged to
have made last month between
farm prices and a settlement of
its EEC budget demands.
- The -other, five Uovennnente/
however, argued last night that
majority dedsion-mtoang to
line with toe Treaty of Rome'
should be toe oorm — aUtura^h.
Italy is thought to have asserted
that toe, Luxembourg coanpro-r
rase vras stiff intact despite toe
farm price vote.
British officiate suneared
satisfied with the tat ^ an d
concluded that “toe Luxean-
bourg compromise win apply hi
toe Jirtnre as [it dad. in toe pasT
in toe -light of toe dismissions
today."
toey also acknowledged
that there could- he no- cerodiity
that- a majority of governments
wai not in future conclude tort
a national veto is being ana-,
apphed and over-ridden as they
tod on May -18. -• -
bifj..
Thfis.is s»rtly because toq
farm price vote was a psychoJo-
breatetiirbu^i for toe
winch ' wffl
encourage some member states,
particularity, toe Beadux, td
wek s greater use of majority
voting. In addition, gorcm-
ments- may -wefi be mwe
scrupulous in toe- future about
pleading important, national
interests: in order to -block an
a^stoment.
•jESjSar
WIWICIAl -RMfiS, pubRsM.ikif
B xcept Suntfayg «qC hoMtya. U.S
wtmcriptfoi. *366.® w 9tmm
N -Y-v end h mtmm
cant «. • ; - ■ . * — *. • • ■
L - -
*
J une 2\
Financial limes Monday Jurie 21 1982
WORLD TRADE NEWS
Or*
Our Foreign Staff examines the impact of the recent U.S. subsidies ruling against Europe’s steel industry, and the adjustments facing the EEC.
move UwwJI r I i+nir.:.!,...
ua move
a blow to
^dd'ckerill ■
'{recovery
£jB/<3iles Merritt in Brussels
of ‘ j?""- TEE BELGIAN steel Indus
-t ~ • -which relied last year on
r: . .i ; ^ .jU.S. export market for 7.8
,J . a of iO >tceut of its total sales, s
- 3/rt. -.fi&e- ‘UB. Commerce Dep
, lima e '^ Ine;nt moves as a serf
J ] °v 5r.< /source of trouble,
o-a .. ■ ..'•.Cockerill-Sambre. the spr
Hard thinking for steel makers
BY PAUL CHEESER1GHT IN LONDON AND GILES MERRITT IN BRUSSELS
eX*»- -•„!?*» •'
?£$'$■■
ajii
I-
ftrS •'•
;,rr S deeai- V
.•nwAji j.. . u
r%}**
hireiy [ fl
ajifi.i
• ck ■‘-•'.s ; *i
• • y eve fo&L?
> -s ia: -j
ktosSl pK supply vessels reassured
veto of market access to Norway
,‘^JB i Giles Merritt in Brussels
THE BELGIAN steel industry,
- "which relied last year on the
^U.S. export market for 7.8 per
ytceot of its total sales, sees
ff&e TJB. Commerce Depart-
Tment moves as a serious
/source of trouble. For
/.y Cockerfll-Sambre, the spraw-
v-iing state-owned steelmaker
„ once described as “ a coop for
/lame": ducks,” the likely
.■imposition by the U.S. of pre-
• /iiinMaiy 20-21 ■ per cent
’..coimtervailing .. duties could
~-7|m^ the group from slide into
Tjfith tosses that in 1981 reached
.froyer BFr 17bn (£2D9m) and
.-i^are, -this year, headed on com-
>"paratiyely optimistic asstunp-
“<tions for BFr 12bn, Cockerill-
Sambre says it will find the
a loss' of its UB. markets a
/heavy blow. Last year’s U.S,
/'rales of almost 360,000 tonnes
^represented a vital part of its
'/5.5m tonnes output, while, in "
j certain key products the
group’s average 7.1 per cent
■- .dependence on the. U.S. rises
r/sbarply and in some products
a fifth of output is earmarked
JFor theUB.
■JCtf rii Belgian steelmakers are
/so gravely threatened by the
/’ U.S. measures as Cockerill-
v.-Sambre. Forges de Clabecq,
- rthlcii relies oh the U.S.
/market for an extraordinary
. J26.fi per cent of its - sales of
/steel plate, has been hit only
■-•fay a comparatively low 5B
‘ft-per 'cent preliminary duty.
-r-Yet there are fears that the
‘/drawn-out uncertainties sur-
/fTOunding the U.S. procedures
■hrcould affect producers such as
Clabecq ds much as greatly
more subsidised groups like
i Cotkeriir-Sambre. ' - - '
THE AMOUNT of steel im-
ported into the UB. first passed
the 10 per cent level in 1965.
Since then, UB. producers have
waged 'a vigorous, if spasmodic,
campaign against both European
and Japanese . manufacturers
active in selling into the -UB.
market
The arguments have been -
broadly the same all along —
that many foreign exporters
were guilty of dumping steel at
low prices and that they were'
often beneficiaries of state sub-
sidies— -in effect, they were com-
peting unfairly with U.S.
industry, which is all in private
hands.
"What is new about the latest
action .against EEC and several
other foreign producers — the
preliminary • decision by the
U.S. Commerce Department to
impose countervailing duties
mainly on UK. Belgian, French
‘and Italian producers — has
been tbe attempt to formally
quantify the subsidies.
• This stems from a U.S.
decision to unilaterally interpret
the -new . subsidies code
embodied within the General
Agreement on Tariffs and Trade.
Both Britain and the EEC
.have separately protested to the
UB. saying that the subsidisa-
tion currently going on was part
of a vital programme to over-
haul the European steel
industry and make it more self-
sustaining and competitive. It is
argued that the Commerce
Department move contradicts
UB.- -Government policy, which
has been to back the Com-
munity's rationalisation pro-
. gramme.
' If is also feared the move
could damage attempts to
liberalise trade, coming as it
does' during the building-up to
the November : Galt ministerial
meeting.
; But despite its protests the
EEC's .free trade credentials are
far from impeccable,. The Euro-
pean' Co mmissi on is currently
in the throes of Dying to nego-
tiate -a series irf restrictive tex-
tile Import deals with . the 28
mainly; Third. World, signatories
of tbe Gatt-backed", Multifibre
Arrangement (MFA). It is in-
creasingly beset by - protectionist
pressures from member states
in agriculture, as much as an the
industrial sector. :
But it is the potential impact
of the U.S. preliminary counter-,
vailing duties on . the EEC’s
internal steel -market that is tbe
most immediate concern. UB.
officials stress that- the new
duties are liable to hit only
1.7m tonnes or less of the EEC’s
annual steel sales in the UB.
of some 6m tonnes. Brussels
fears that . the Co mmuni ty's re-
cently renewed steel regime
governing prices and produc-
tion could collapse if Belgian.
British. French and Italian pro-
ducers attempted to unload their
blocked UB. shipments inside
the EEC
The first" attempt to tackle tbe
issue is to be made later this
week, when the 12 major steel-
makers grouped in the Eurofer
steel association meet 'to
examine emergency proposals.
Eurofer will consider a . bur-
den sharing idea under which
(hose - EEC steelmakers un-
affected by the UB. duties
would “ swap " tbeir non-U. S.
export, contracts against the
UB. market arrangement until
recently . enjoyed by those com-
panies whose sales there are
now effectively blocked. ■
It is an ingenious idea that
will severely test EEC steel-
makers' '. solidarity.
W. Germany shares U.S. view on subsidies
BY JAMES BUCHAN IN BONN
NOT FOR nothing . is
sekadenfreude a German and an -
untranslxteable word. For the
past seven years. West German
producers have complained long
and priinly about the state
subsidies raining dowfl on their .'
European competitors and
amounting to some DM80bn -
since tbe start of Che steel crisis
in 1975, according -to the
producers' federation in DusseL-
dorf. In contrast, West German .
producers have received stuns
unlikely to be much in excess
of DM 2-3bn. These have been
described as “good” subsidies
geared largely to restructuring
activities.
The UB. Commerce Depart-
ment has now provided support .
for the German view in an
unmistakable manner. The two
largest concerns, Thyssen and
Hoesch. are considered to be
subsidy-free and are not liable
to the Department of Commerce
ruling on the need for a
countervailing duty. Washing-
ton's estimate of the national
average of subsidy, at IB per
cent of fob cost, is the lowest
in .the Community after the
Netherlands.
• “The Commerce Depart-
ment's . decision really
underlines the different subsidy
practice in the different
Community countries," says the
producer's federation, which is
headed by Thyssen. “ We’ve
come out of it pretty wen," said
one expert, and there is a
general feeling that the
countervailing duties may not
be levied at all on West German
felantifc
‘T ci ::ir.dns!
W FA? CJgST^K IN OSLO
sr .y.K iiUPPLY^ boat operators
.: r.aj • h/a d> fear ' no t . : protectionist
: .* ii-,3 an/ ftameas- on^ the Nprwegish
— i new 'flwfcet* ■ Mr - Iain Sproat.
. i iULicedifli £fitfcln’s Snjang Minister.-told
-. • i r.ei-tii «f^>ress deference in, Oslo; ...
J /r aaft i: -Earlier last week -Mr Sproat
•.- ./LV.to ratpressed concern .about-- the
“grotesque imbalance" in the
. , " number of .. offshore vessels.
pricing each, country's explora-
tiim areas. .He- promised ; to
• "V- . itfess' for more UK rtiips to be
- Slowed into Norway's sector of
- ■■ jgfe- North . Sea. But at'-a press
-"'i y; conference Friday, he took a
2 ' cfttepletely different' line after
r r. : talks with his ' Norwegian
:#pqsite'-‘ number,; 'Mr Arne
3-ne 2/^Skauge. '•
rrc ; ?" ^ Sproat said timt Mr
— : —
. 4 ^. -v. ’ ••• ■
r. ^ . _ . ,
Skatige— who Jiad been .“.very
Open and forthcoming ”—had
convinced blip the Norwegians
practised no protectionism. . .
"Both, our countries have a;
keen interest in' advocating free
iuMf open trading, because we
fear the growing trend towards
protectionism . In . stripping,"
Sproat declared.
The two Ministers identified
two factors which could bias oil
companies in favour of hiring
Norwegian supply ships for
work in Norwegian waters. One
was the belief-— quite mistaken,
according to Mr Skauge— that
by “ hiring Norwegian ” . the
companies might win favour
with Norway's authorities.
The other was the possible
-i SHIPPING REPORT
/[.Slight rise in tanker activity
■ ;-T 5 ss- .v*.
.‘fifi'v
V/BY ANDREW FISHER, SHIPPING CORRESPONDENT
, :p »-■
""rfspro»« ■
'//V
‘vri **■
-esi*:
;v:
■
r" [2®
-S- "“.fW-
• ■ /
ZrA-
S E -BUSINESS was done m
inker market last week, but
did not stow any merited
qgturs since .there is stSI afsur-
t us -of vessels. : ..In dry cargo
artels, ' •■the 'trend' was quite
ejparly ■ downwards from levels
winch were already depressed:
mE; A. Gibson said that wth
bfetmties in the Gulf lessening
s^aewibat • the Japanese ' Sea-
men’s Union was allowing, its
members to go to Kbarg Island,
off Iran.:'.
/Several VLCCs were fixed
from here: last- week* mo^liy with
pwt" cargoes- • One of 220,000
tons was secured at Worldscale
26. repmtedly with options for
either East or West, with. - an-
other of 205,000 tons to the East
at Worldscale 22.
Gibson -also said that two
210.000 formers, each with a part
car®? of 125,000 tons, chartered
to go through the Suez Canal
received Worldscale 52 j. On the
more medium-sized units, a
125.000 tonner carrying 100,000
tons to Italy was paid World-
scale 50.
The W^t African market has
come back into the running as a
major chartering area, accord-
ing to Galbraith Wrigbtson. Pre-
viously. ships which have tended
to specialise in cargoes from
. there' have had to switch to the
Mediterranean and ' European
markets, thus adding to the ton-
nage surplus there.
Dry' Cargo markets simply be-
came more dismal last week.
Denholm Coates commented -
that “the storm signals must
have been hoisted in every ,diy
cargo owner's boardroom by the
falls of the last few weeks."
Grain rates" from tbe U.S. to
Europe and Japan, dropped even
further.
German group in $98m Indonesian deal
■ , s-:r> ' BY RK^tARD COW PER JN JAKARTA
MANNESMAN DEMAG of West pected^to be si^ed shortly, pie
^v.^Cenhwy-is srt to Win a contract new plant v ° f “
L-ceo :j '^sTSC- design, engineer and con- estimated JlBbn expan^onof
s a tin plate mffl for Ihdonesias Krakatau steel com-
V-Se Indonesian Government. plex at Criegon in West Java.
^ has The West German company
/: (fWen'awSed a letter of intent 1 ^ r S«2?*£i*SIv? SS
a if >™* contrat?t 13 ex- from Da^r M^ee
of - Great BritaaiL and Nippon
Steel of Japan. WWle Mannes-
man is the main contractor
- the Japanese manufacturing
company of Hitachi Zosen will
supply plant' equipment, some
80 per cent -of wirich is expected
to come from Japan.
Construction' of the 120,000
tonne plant is expected to start
later this year and is to be com-
pleted in 1985. The tin plate
mill site is 110 km west of
Jakarta. /.
Charities.Aid
farefbetive
rr in rt rials and compa nie s
-'*■» »« BrmMmari covenant
tAlorid Economic Indicators
Mont ana own me.
riftn aWpn/ tajibe covered
one covenant, beneficiaries
rV lwnhang fld PI* dflna M o n fl
[■todat.wiU'. Trast services
dan intereab-froa loan
letme are also available for
brtavBgftin^.
^A^ ADVKiBgBO M •
BMHIESAQ)
U5. Sbn
W. Germany: DMIw
France Frftbn
Italy Urefan
TRADE STATISTICS
Apr. '82 Mar. *82
Exports - - 17JM0 1B-602
Exports
Imports.
Feb, VL
18.704
19JJ90
Exports
Imports
Balance -
Exports
Japan $bn
UK fbn -
Belgium- BFribh"
Netherlands Film
—0-340
— 1.747
-0J87
36.50
4L77
3450
33.06
1554
r 3080
+3.44
+6u4i
■ +3J0
49.47
50.73
5U5
59.63
. 55.18,
S6A3
-10.14
-4*5 "
—528
8,847
8£33
" J58S
10,143
10,040
10,514
-1314
-1,107
-2^31
• 12:1* ■
12.140
10246
10J
12.130
11.045
+M
+OA10
— 0299
Mar, *82
Feb. *82
Jan. *82
4584
4433
4258.
"Exports HI ' . 12.140
Imports 10J 12.130
Balance +M 4-0010
/ Mar, *82 Feb. *82
Exports -4*584 4433
Imports 4J62 4L27?
Balance +£1222 +0.154
Feb. *82 Jan. TO
Exports 1*0379 153 J81
Imports . 1W.73I 184.749
Balance — 8352 ' ”*30788
Exports 14400 14600
• Imports • 13J00 12.400'
Balance '.+!.«» +2J»
? 4410
— 0t52
Dec 91
192.410
194249
— 1.839
14904
14483
+0J21
Apr. '81
19.784
2ZJ49
. -Z443
'.3SS7
130 JJ
+3 JO
47.45
50.29
—2^4
7JSI
9,616
-2^59
12-422
11.10S
+ 1S17
Mar. *81
3.948
3J02
+0j544
Feb. Til
I5JLOOO
. 188B40
-—30840
13.108
12B85
+0223
steel, exports to the IJB M which
amounted to 213,000 tonnes
(excluding pipe) in tbe first
quarter of- this year. Meanwhile,
the competitiveness' of West
German steel . in • the U.S.
market looks set- "to "improve
sharpiy.
Of the six West 'German pro-
ducers, excluding the two giants,
assessed for government sub-
sidies. only Roechllng "Burb&ch
and Salzgitter were estimated to
be receiving subsidies over 1
per cent of fob value. Roechl-
ing Bnrbach, which is tbe centre
piece of the Bonn effort to. re-
structure the Saarland indus-
try, was assessed at 8.6 per cent
but has negligible exports to
the U.S.
The state-owned Salzgitter
concern, which receives regional
aid to compensate for its posi-
tion close to the East German
border, is a more troubling case
because, though it was assessed
at only 3.6 per cent, it depends
on the UB. market for 5-10 per
cent of its sales of rolled steel,
or about 3.3m tonnes last year.
The concern said last week it
was uncertain of the outcome
but was continuing deliveries.
Salzgitter lost DU 388m last
year.
In the longer term, there Is
-concern among the producers
and in Bonn that a widening
"trade conflict could only have
severe effects in West Germany,
which is heavily dependent on
export trade, and which has just
seen its currency valued up-
wards within the European
Monetary SystepL
Italsider
fears EEC
pressure on
own market
By Rupert Cornwell in Rome
THE ITALIAN steel Indus-
try is worried above all by
the indirect effects of tbe
preliminary move by tbe U.S.
Government to Impose
countervailing duties on steel
imports from a number of
countries.
The Washington authorities
have singled, out, among
Italian producers, Italsider,
the troubled subsidiary of
Finsider, the steel holding
company, in turn controlled
by the public sector con-
glomerate 1KL Italsider will
be liable for eonntervailing
duties of 18 per eent, equiva-
lent to the level id subsidies
the Commerce Department
estimates the company
receives from the Italian.
Government:
In fact, Italsider points out,
the quantities of hot and eold
' rolled strip and plate covered
. by the measure are -very
small The company is fear-
ful of the possible side effects
caused by the action taken
against French and Belgian
producers, whose deliveries
to tbe UB* it says, are much
larger.
Italsider Is worried that its
Community rivals may try
to unload some of lb e steel
otherwise destined for the
UB. onto the Italian market.
Italsider. much of whose '
activity has been hived off
into a new subsidiary Nnova
Italsider, is currently en-
gaged in a drive to restore
its fortunes, after 19 81’s
record loss of LI,69Sbn
(£730m).
However, one of its big-
gest problems has been the
high level of foreign imports,
equivalent to around 40 per
cent of total 1981 national
output of 25Bm tonnes.
France to slash
its steel exports
BY TERRY DODSWORTH IN PARIS
THE FRENCH steel industry, are going to be hit hard by the
dominated by wo nationalised UB. action. The American
companies, Usinor and Sacilor. market accounts for almost
has expressed indignation to the 5 per cent of France’s current
UB. because of action on steel steel production, and for many
imports. years has been taking between
,ho tt c Terr, lm and lBm ton nos. Only West
C £“" Germany and Italy, accounting
^omp^nF tor about 1.5m tonnes each, buy
more French steel.
According to the U.S. Com-
merce Department, the two
French producers sell some of
the most heavily subsidised
steel in the UB. The Depart-
ment’s study said that Sacilor
was subsidised at a little over 30
per cent on its UB. selling price,
and Usinor at a little more than
20 per cent.
In a strongly-worded riposte
to these accusations, the French
manufacturers attack the
countervailing duties imposed
by the Americans as “iniqui-
tous.” UB. action was inspired,
the statement adds, by a form
of protectionism that “could
have extremely damaging conse-
quences for everyone,” and
which was particularly inappro-
priate coming from a country
that was running an overall
trade surplus of FFr 25bn
(£2.1bn) with France.
The French companies are
not 1 now proposing any inde-
pendent response to the U.S.
moves. They say the U.S. ac-
tion is not justified under Gatt
regulations, and they will go
along with any co-ordinated
European action undertaken by
Eurofer, the European steel pro-
ducers' assosiation. within the
framework of Gati.
In the meantime, exports to
the TJ.S. will be cut to a
minimum because of the high
penalties to be imposed by the
Americans. These cuts will
merely accelerate voluntary
reductions that have already
bitten deeply into French sales
in the U.S.. running so far this
year at only about 20,000 tonnes
a month against 80,000 to
100,000 a month last year.
There is no doubt the French
Last year there was a surge
in French exports to the U.S.,
but this was only because 1980
was depressed, because of the
U.S. Steel threat of anti-dump-
ing action. French sales for
1981 amounted to 1.01m toones,
a little less than in 1979.
Meanwhile, the French in-
dustry is pushing ahead with
further Government-aided
rationalisation plans to add to
the reorganisation announced
in 1978. According to Govern-
ment plans published last week,
more than FFr20bn is to be
pumped into Usinor and Sacilor
over the next four years in a
variety of projects aimed at
cleaning up their balance sheets,
covering losses, and modernis-
ing plant
Ian Roger adds: British Steel
Corporation was not surprised
to be singled out as the most
heavily subsidised European
steel producer.
Two years ago. Mr lan
MacGregor, the chairman, said
that the corporation was bank-
rupt and since then the British
Government has agreed to
pump in £S80m in aid and to
write off £3.5bn in capital and
loans.
But BSC officials are bitter
that they have been made to
look the worst offenders in last
year's massive attack on. tiie
U.S. market by world steel-
makers.
In fact, BSC's 0.4m tonnes of
steel delivered to the U.S. last
year was well down on the
traditional level of shipments.
existence of differences in
technical standards for speci-
fications.- On this latter ques-
, .tion, they had agreed it would
be" a good idea to let a joint
working , group
• The European Parliament
Friday endorsed proposals for
a -European . Coastal Charter
aimed at tightening controls on
shipping and pollution on the
coastline of Western ■ Europe,
A P reports from Strasbourg.
Tbe charter, drawn up by the
Conference of Peripheral Mari-
time Regions, wfll co-ordinate
pollution research being done in
various centres and launch pilot
schemes financed in part by the
EEC for protecting the coastal
. environment
WORLD
SPENT A FORTUNE ON
TRAVEL BILLS ALONE AND
HADN’T MADE A PENNY”
“That is until Wednesday,
May 12 when j was able to
announcethat sales contracts of
$37,000,000 had been signed
for agrlcu IturaJ chemicals in
Spain and Brazil. .
-■ Within the next 6^ months
further contracts will be signed
in France and other parts of
Europe and Ceritral/Soiith
America, bringing the.total value
of sales to $70,000,000 aH
negotiated in a staggeringly
short 6 months from December
The brand with which we
haye had so much success is TAL
Pro-iOrig. It is manufactured by
TAL Chemicals Company here
in the United Kingdom and it
prolongs the life of certain types
of fruit. TAL Pro-long* produced
by a highly technical chemical
process, is- made from sucrose
esters, cellulose and fatty adds
and is an approved food additive.
F.F.L wasformed in
March 1980 to market fruit
MR. TERRY HODGSON, M.D. F.F.l. LTD.
treatment systems - "Pro-life
Systems n as they became known
and TAL Pro-long was one of
those systems originally -
developed during the 1970 , s.
There now seems little doubt
that our efforts to conquer new
markets for TAL Chemicals
Company will lead to substantial
overseas earnings and to the
creation of many new jobs,
both for them and ourselves in
the UK.
The team responsible for
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of a new export sales organ-
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Our recent success proves
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If you would like to explore
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BRIDGING THE GAP BETWEEN
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FRESH FOODS (INTERCONTINENTAL) LTD.. 64.QUEENSROAD > 'READING, BERKSHIRE RG1 4BP ENGLAND..TEL: (0734) 582316, TELEX: 849439-
4
1&>Wt?fa
A A L- /*+/■,
Fmah<M ; 'Times ;Moaday June .21 1982
UK NEWS
Specialists sought by co-operative agency
BY JOHN ELLIOTT, INDUSTRIAL EDITOR
FOUR EXECUTIVES with ex-
perience of marketing and
accountancy are being sought on
secondment from large com-
panies by the Government's Co-
operative Development Agency.
Mr George Jones, the agency's
new director, himself on second-
ment from Unilever, has written
to 12 large companies asking for
help. He believes worker co-
operatives lack marketing and
accountancy skills in particular
and that his agency should, help
plug the gap.
The number of co-ops in the
UK has increased rapidly in the
past few years. There are now
about 500 compared with more
than 300 in 1980. Many have
been founded by people who
have been made redundant aod
most are very small, avera ging
eight or nine employees.
Mr Jones toured 30 co-ops
and found them especially
effective in service and highly
skilled areas where there is a
high labour content and a need
for good quality work.
“The quality of goods manu-
factured is very high,” he says.
“A pride of ownership seems to
come through as the worker
realises that bad goods drive
away customers.
“People are sitting on top of a
profit and loss account so they
get a rapid education in the
realities of business that you
cannot get with a traditional
workforce. But the problem is
that, unlike most traditional
small businesses, those setting
them up usually have only one
production-oriented skill and no
knowledge of marketing or other
management techniques.”
But it is the quality of work
and the personal commitment
which impress Mr Jones. He
cites as examples a blouse manu-
facturer in Wales exporting
goods to Germany, a raincoat
manufacturer in Bradford
selling to Aquascutum. a
wooden pattens maker in New-
castle producing highly intri-
cate work at a profit and a
carpet manufacturer in Dundee
producing goods for Sanderson
and for hotels. Several of these
are relatively large businesses
employing 30 people and several
were rescued from businesses
under conventional private
sector owners.
Mr Jones, 53, started his new
job in March having joined
Unilever 30 years ago as a
clerk. He specialised in cor-
porate planning and marketing
Mr George Jones
and was a director of BOCM
Sticock and chairman of
Unitrition, both animal food-
stuffs companies. Unilever is
subsidising his salary which is
well above the Civil Service
assistant secretary's level of
about £20,000 a year fixed for
the job.
At Unilever Mr Jones had
experience of employee partici-
pation and became interested
in expanding the concept
“ My phiisophy is of a mixed
economy with all forms of
organisation contributing.
mixing private and 'State owner-
ship and now co-operatives. I
believe that the more democracy
you can get into a business, the
better it will be because people
do have something to contri-
bute. But I'm not yet-snre bow
it can work on a large scale for
cooperatives in this country,
though it has been done in
Italy and Spam."
Mr Jones’s appointment is
part of a move to turn the
agency into an effective organ-
isation following a board
shake-irp last year. The Govern-
ment then gave it a three-year
lease of life with, a £200.00G-a-
year budget and told it become
a more business-like organisa-
tion. -
The agency was set' up to 1979
with all-party political support
by the last Labour Government,
following years of debate within
the co-operative wtog of the
Labour Movement about the
need for some sort of ' promo- '
tional organisation.
It has concentrated on worker
co-operatives but has had an
extoemeay luxated impart. Sir
Keith Joseph, then Industry
Secretary, decided last summer
that ft should be given until
roughly - the end of this Parlia-
ment to prove itself.
A new board was appointed,
chafe ed by Mr Ralph Woolf,
mana g in g director of Scott
Bader, a Northamptonshire
ch&xhcail company which has
been owned by its employees
for. about 20 years. The board
includes Mr George Wright,
secretary of the Wales TUC,
who is helping to found a co-op
development centre to Wales
■along tiie lines of the
Mondragon community of co-ops
in the Basque area of Spain.
The agency has a staff of 12
and will soon gain its first
secondee. Mr Ian Brierley. an
economist from the Cooperative
Bank who has considerable prac-
tical experience.
Mr Jones’s aim is to persuade
the occasionally warring fac-
tions in the Coop movement to
work together to improve the
viability of new enterprises.
He will stress that viability
rather than, lack of finance is
the primary problem. “ In prac-
tice you can’t solve things by
just shoving money at them.
You need to get the right skills
to create the products and mar-
kets which will then attract the
finance. Then you're on your
way to viability.”
Birkenhead cargo service to end
BY OUR LIVERPOOL COftR£SPONDB4T
THE MERSEY Docks and
Harbour Company is to with-
draw its cargo -handling opera-
tions for conventional liner
services from Birkenhead at the
end of the month.
The decision, which has the
backing of Mr David Howell, the
Transport Secretary, came as no
surprise to the waterfront. It is
in line with the dock company's
rationalisation programme,
aimed to achieve financial
stability hy the end of the year.
decision would not mean the
closure to other stevedore com-
panies of Birkenhead docks
where £400,000 has been spent
on improvements to the pump-
ing equipment which maintains
the water level in the enclosed
docks.
the port and will now be accom-
modated in Canada Dock at
Liverpool.
Transfer
The decision will mean the
transfer of 382 dockers and 180
other employees to the Liver-
pool side of the river, while
another 125 dock company
employees will continue to
work at Birkenhead.
Sir John Page, the company's
chairman, stressed that the
The Pacific Steam Navigation
Company, the main user of the
Victorian dock complex at
Birkenhead for its Sooth
American services, is increas-
ing its volume of cargo through
Mr Howell has indicated he
accepts that the dock company
has a strong commercial case
for ending its own cargo-
handling operations at Birken-
head as quickly as possible.
Lager plant for Toxteth
BY OUR LIVERPOOL CORRESPONDENT
HIGSONS, the Merseyside
brewer, is to invest mate than
£1.7m on a new lager plant on
the company’s mgin site in
Toxteth, Liverpool, helped by
■Funds from the Liverpool Inner
City Partnership.
The plant will be housed In
a conversion of the old brew-
house. Higsons has spent £4.1m
on a new brewhouse which will
be formally opened on Wednes-
day although it is already in
production. Higsons had
planned originally to pause
between the two -investment,
projects bnt decided to start
work on the lager plant to meet
demand.
Higsons made a pre-tax profit
of £426,000 in the half year to
April 5 but has been affected
by the depressed state of fee
Merseyside economy.
• The collapse in beer con-
sumption between January and
March last year and the same
three months of 1982 was prob-
ably bigger than the fall In pro-
duction suggests. Public
Attitude Surveys says in a re-
port published today. Production
fell 7.5 per cent compared with
the same three months in 1981
but the volume drunk was 1L5
per cent down on a year before.
Private
parcels
‘threat to
P.O. jobs’
By David Goodhart, Labour Staff
THOMPSON National Trans-
port, which launches today a
private parcel deiivwy service,
called Homefast, would pose a
big threat to Royal Mail parcels,
if it were to reach its target of
1m parcels a week by next year r
according to a confidential Post.
Office report on the company.
Royal Mail traffic could
decline by up to 35 per cent,
the report says. The Post Office
now delivers about 175m parcels
a year, and has more, than 7,000’
major contract customers on its
books. But Post Office re-
searchers believe that Home-
fast, which, is initially aimed at
the large mail-order business,
could threaten the public body’s
whole (parcel contract business.
A joint working party has
been set up by the Post-Office
and the Union of Communica-
tion Workers to counter the
threat from Thompson, a com-
pany with an annual turnover
of about £6O0m and based in
Australia.
The union fears that most of
the 17.000 jobs in the Post Office
parcels service could be in
jeopardy, and is backing Post
Office attempts to improve
services and bs®g' on 'to custo-
mers. After a loss of £SL8m in
1980- 81, the Post Office parcels
service .made a £7m profit in
1981- 82.
Mr John Carney; general
manager of Homefast, described
the Post Office calculations as
hysterical over-reaction. “ We
are aiming for a traffic of. about
10m parcels in thefirst year of
trading, which is a tiny fraction
of the business." he said.
Thompson Natiopal Transport
has launched a successful UK
overnight service (TNT Over-
rate) arid a 48-hour, door-to-door
service to the U.S. (TNT
SupaniBh).
Homefast wfll guarantee a
five-day delivery service — '
longer than the .claimed average
of three days for Royals Mail—
but plans to make household
deliveries in the evenings; when
many people are more likely to
be at home.
Crime risk in
building societies,
BY
SERIOUS RISKS of fraud, and ' Associating, which 'the com-
embezzlement confront, the mlttee saw as having no stand.
public in dealings-, with 1 small ing in the context of the inquiry,
building societies^ according- to ' - The immediate reasons for
the findings’ of a Committee of .. toe inquiry, undertaken at the r -
toquiiy . submitted to the Insti- request - of./ the chartered :
tute of. Chartered Accountants, accountancy profession's joint..
Societies with’ about eight disciplinary scheme executive, "■
staff bf fewer wfll have “the -was the case of AMreton Btrifol •
^aten - difficrfty”ln maintain- ins. Satiety,
mg adequate systems of control ' The AKreton was a tiny
and. inspection over their -own society, now merged into the
affairs,., it -says. This win,. In Britaawia Bwjatog Sotiety. ;
practice entail situations -inhere 'BeCween 1975 and 1980 it was
M tfae£e is little to hinder , the defrauded of £191,072 hy its •'
progress, of a dimmest chief own .secretary, convicted In .
executive.” November of theft, false
- Mr • David ■ Hobson* ?- who accounting and- forgery,
chaired the committee -and. is --The inquiry was set up to
sensor partner -of the "account-, look into the- conduct , of three
ing firm ■ Coopers'. ind'liytrnmd, ,-afccountouts, Involved. in the '•
said yesterday that this was • a i Alfret on‘s~ a ffai rs, two as exter-
condiisftin''; “ of considerable 'nal auattirs and the. third as its
importance;** 4 : <tiuuiman^thiqsighout the period
His committee had consulted’ to' question:
with tire 1 Chief Registrar of, • report, criticised certain . ■
Friendly Societies, 7 who has aspects -of tireir work for the .
. supervision ,:of the sector, and “ Affrebm,. but. in aH three cases
given him a draft of its com- -Condnded' that no- adverse
merits on the problem of small -findings on *Cbeir -conduct and ..
societies* . :■ ^ompetonce Were’ justified.
The' Registrar expressed no ' The vulnerability of the
objections, said Mr Hobson, and - Alfreton to. the -criminal activi- ..
offered no official .reaction; The ties s - its then secretary
-committee had had no contact ■ , prompted the committee to
with - the Building Societies” draw- a Wider lesson.
Pension accounts advice
Data protection
report criticised
By Kenneth Gooding
STRONG criticism of the
Government's White Paper on
data protection is contained in
a paper from the Institute of
Daa Processing Management
(IDF! M) released at the week-
end.
The Government was wrong
to reject hte establishment of
an independent Data Protec-
tion Authoriy because, “since
he Government is the largest
user of computers in the coun-
try, nothing less than genuine
independence of the administer-
ing authority is going to he
acceptable.”
It was also wrong not to
include manual data systems in
the proposed legislation, says
the IDPM.
BY DUNCAN CAMPBELL-SMtTH
GUIDANCE on a desirable
form of '. published annual
accouute for pension, schemes is
suggested on a discussion, paper
released today by the Account-'
ing Standards Committee; "the .
internal watchdog, of -the
accountancy profession, ’
Pension schemes are' not . at
present obliged to - prepare
formal accounts, let alone
publish them. The. discussion
paper sets out a number of
detailed -recommendations - and
is widely expected to . stir up
further controversy to an area
already vexed by long-standing
disputes between the accoun-
tancy and actuarial prof essions.
The!.' discussion .. paper * is'
intended eventually to lead to
an exposure draft of a new
accounting standard. . : Mean-,
while, a working party under
tile standards committee is
looking into the treatment of
pension costs : in company
accounts. The two developments
togelher represent an important
Initiative, by the. accountancy . '
profession.
V Two .points to : the discussion •
paper are expected to draw- -
particular ewaanent'- from the
actuaries. The - first considers
whether a pension scheme's
actuary shotod be ' required to r
provide . a sample statement of [/'A (1(1
approval for an nhmn»i report L* 5 ~ i s
. or whether he should have to. , .
-.give, more detailed actuarial
information about £ its- ^general y ” **■ ‘
.position, -i • > ’ ’ * ..«"*.%•••
Second, the pape¥ discusses-— ?
With -a-., carefully., observed-;,
balance of views— 1 whether or
apt; actuarial practices couM -
Sensobty be made subject to
standardisation. -.
.. - Corrknents- s ou the paper are: -
requested by December: 31.
Pension . Scheme Accounts— a
IJwcttssiim Pape*; £2,5?! post- - .
five • frim'-The puWtcations . -
Department, .PO Box 433,
Chartered Accountants" . Ball
Moorgate Placed Londori EC2f .
2BJ. ,,r '
Gower plans attacked
BY JOHN MOORE, CITY CORRESPONDENT
MORE CITY opposition has
been voiced against a. report
on investor protection, corn--
missioned by the Department
of Trade, ..which proposed
sweeping reforms -in the system
of regulation.
The City capital markets
committee, which represents a
wide range of interests, ' has
come out against proposals
■which it says are “ bound to be
disruptive and expensive.”
The committee comprises
representatives from the mer
chant banks, unit trusts, inst-
ance companies, the stock mar
ket, clearing hanks, accountancy
and the law; '
’ It says, that changes discusser -
to the -report! prepared by Proc
fessor Jim Gower, adviser to the :
Department . of Trade on com .■■
pany law,;, should be avoided-
“ unless it is shown that they
are really needed to protect
investors or to promote com-
petition in their interest??.
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^feep-
3X1(1 I into Picking winners and making them pay— John Elliott examines the SDP’s latest policy
/r* _n _ ' i - r •" m . ■» ' ' ' _
-SA"
li “SiS
romise
on retail policy
'^f;V? Y DAV,D CHURCHILL. CONSUMER AFFAIRS CORRESPONDENT
ice these shops
important after-
L* ' **Z££-g1Z?£g5 £
inji' o?Pai?°TjSSJ e 31111 the . ®? so , important in keeping
B V< £•: ™ 3dl ^ 8; bicycles in road-wohby condi-
'-SSir ' Q^T is exepected to an- uon. Raleigh maintained. • -
' S! -072 1' norace shortly that it has re- But aft er a length v investiga-
^cu l: ’■‘•SrXi. u i nder taidngs -from tion the. OFT concluded that
... . Kal#J&o to keep its future frail- Raleigh's policy restricted coni-
v?* 1 *!-* 1 g-
? s i : - £ls *i?£ r
S’
c ;.^whSch were significantly
“'iv- srtonger than those suggested
.by the Commission.
also important' in keeping
bicycles in road-woriby condi-
tion. Raleigh maintained. • -
But after a lengthy investiga-
tion the OFT concluded that
Raleigh's policy restricted com-
petition.: The Monopolies Com-
mission was then' asked to
decide whether this was or- was -
not in the public interest.- ■.
The Commission ruled lasf '
December that it regarded'
Raleigh's distribution policy “ as
prima facie against the public
interest." This was the judg-
ment the OFT had been seek-
ing, since it would help it to
stop other cases of manufac-
turers' refusal to supply -certain
:rw-- ““I \ v - - ils luture frad- policy restricted com-
: ; ;j ‘W t iji.ragi practices in line with a- P e . tition: The Monopolies Com-
■■.^\ hi5 sei .‘'/-Monopolies and Merger's Com- niission was then' asked to
---• : mission report published last decide whether this was or- was
'December. - not in the public interest.- •
^T - :Brit,lhe OFT had sought Twi e K Coran y ssi °n ruled last
r,-o5 L* %?' “ undertakings from the coropjmy » th -t l ,- IT r f. gar 3 ed
sa ®uia/*‘ . which -' were significanUv f*f. ei ° h - s distribution policy as
f .'- -A srtonger than those suggested ? r . una f ®, cie a 8 ainst th e public
' ' by the Commission: suggested interest." This was the jiidg-
n ' ,r ” Vu “ ent ** 0FT h ad been seek-
i-: : 3 bring to an end mg, since it would help it to
T ^: ^6 e- a senes i of investigations which stop other cases of manufac*
1 ' ut!* as ' w nave taketv nearly two years to turers' refusal to supply certain
3 '*«■*" v^- V 16 ? were the first to retailers.
b^ j? a d e iato_ anti-competitive . But the Commission seriously
> ’•'-*» c£ * 1 • - * DJ***Kes under the weakened its central conclusion
s:s V'i *®™ • , Com Petition Act by suggesting that Raleigh need
: re . we “ 33 being" regarded not necessarily supply cut-price
e r -„^:-- Ttt,:as an important test case in the retailers with bicycles carrying
-«n ■ - issue of a manufacturer’s rights' the ‘■Raleigh" brand name,
' — -- to refuse to supply cut-price re- although it should supply other
l t taifers. Raleigh-made brands such as
' The company's refusal to " BSA," "Hercules" and
H ***Jlf: : -supply cut-price stores such as “Triumph.”
Tesco and Argos with its main- The OFT is now. understood
brand bicycles had first to have, decided to accept these
v.- . attracted the attention of the undertakings rather - than to
v r OFT in 1980 when the new' Com- continue wrangling with
,, .. * J .' pefitlon Act was coming into Raleigh, but it is now likely to
eri'Jyi opera tion. turn its attention to other cases
M h*.. ..V- Raleigh maintained that 'its of refusal to suonlv in the hone
V J «a T5
■r.e ^
r -? toe
tr lesson
advice
weakened its central conclusion
by suggesting that Raleigh need
not necessarily supply cut-price
retailers with bicycles carrying
the " Raleigh ” brand name,
although it should supply other
Raleigh-made brands such as
“ BSA," *• Hercules ” and
“Triumph” ...
The OFT is now undemood i
to have, decided to accept these |
undertakings rather - than to '
perauon. turn its attention to other cases
t . ....... Raleigh maintained that its of refusal to supply in the hope
sales distribution policy was in of achieving a more satisfactory
l ,r ^ the 1 best interests of both its outcome.
. : . — 1 .
f Economic line ‘means 3m
“ H “n W. iohlessto end of eentnrv’
V^ rtofE V"- — .'i
a! ?Si 2 R {K'-J;,. aboi
•r.:d? ajtl- .. w ‘ cent
‘ t “■* stra
?z£ - brid
> ;'e:?.T..fr! " latfii
: -ir-sf ' W
jobless to end of century’
BY MAX, WILKINSON
UNEMPLOYMENT will remain group predicts that jobs would
above 3m until the end of the
century if the present economic
strategy continues, sayk Cam-
bridge Econometrics in its
latest projection today.
While no economic forecast
dan' claim very reliable predic-
tions over so long a period, the
increase rather slowly — by only
about, ljm in the last. 15 years
of the century.
This would barely keep pace
with the increasing number of
people of working age, so that
unemployment would remain at
around ,3.2ra, a figure expected
to be reached this year.
>;:n\
Cambridge: forecast provides a 10 ^ reached this year,
baseline .for possibilities . on m . . • . •
present trends, barring big wla?
political or "economic upheavals. f Jffl'
The basic assumptions for the' ™5r to . 3
forecast are that Government • Jj* *}? '
i v iDCDdiiiE would rise bv It dot • Grccow^Ut the broker,
I r A(j c « nt * g V ear from f984 * farther . fall" in interest
“CQ f aJSrage earning would increase ’ | ran be expected, -unless
by about 10 .per cent, and price sterlings^ effective^ exdiange
r inflation would stay at about ™\ e weakens or ttie ^ng-
9 ner cent a vear dollar rate fails very sharply.
It also assumes that exports- Recent dollar strengthening is
will grow at 5 to 6 per -cent's balanced to some eaent by
- J'£g£ w,:-ye* for six years, and there- w « l “ es » °* t c T n ^5? y Sffi
!, • after at an annual rate of about and .^. e ° f a ,? T01 ^
a npr pant . Tmnnm arA on UK costs has therefore not
per cent. Imports are on uk costs nas wererare not
urSm to grow rather faster been as great as it might have.
■ .-/» than pxnorts until the mid-1980s oeen.
' . than exports until the mid-1980s
t--V ”*;, ff -and then rather more slowly.
• : "a sJ' ir?; Chi these assumptions, the
Cambridge Econometrics, 21,
SL Andrews Strecr, Cambridge.
SsH -Booms ‘lift black economy’
^ ‘BY “ROBIN PAULEY
THE BLACK economy, which is
often assumed to flourish during
reciBSSion and high unemploy-
ment, may in fact be Strongest
in 'boom years when the formal
- economy is tight, a new study
"su^ests.
In a paper whirti alms to
assess the -size .of the UK black
eco'nomy - 1 *- transactions which
ev&de tax — Mr Michael O'Hig-
Bins'," of 'Bath 'University Ceirfre '
fori Fiscal Studies, ' says the
Inland Revenue . estimate "of
S te S per cent gross domestic
product appears' to be the most
likely figure, although guesses
range from 3 to 15 per cent. On.
the -Inland Revenue's basis, the
black economy's gross product
. would be about £ 15bn a year,
.making a net tax loss of £4bn.
Agj analysis of the hidden
economy 'shows that it grew
rapidly during the years of
rapid' economic growth in the
early 1970s and has grown rela-
tively little since -the late 1970s,
although public criticism of
taxation levels peaked ’ during
the late 1970s.
Mr O'Higgins says the black
economy appears to have grown
rapidly in the three .periods of
fastest economic growth sifice
the 1950s — 1959-61,. 1963-55 and
1970-73. Since 1957, unemploy-
ment has been Jess, than 2 per
cent only in 1960-61 and 1964-66.
and the lowest rate of unemploy-
ment in the 3970s was in 1973-74
— all within* -the busiest black
economy periods.
About three-quarters of the
hidden economy appear to occur
in self-employment, with the
construction industry having by
far the highest levels of tax
evasion.
National Savings growth
flY -ERIC SHORT
THERE was a marked improve-
ment in National Savings hi
May, following poor April
figures. Net receipts were £35px
'. up : chi- those, of the ’previous
." month, at £124.5m.
But that was still 4>niy -half
the?: monthly average needed to
be' on course for the Treasury's
goail of £3bn. for 1982-83. The
total net contribution to fund-
ing, in the first two months
overall, amounted to only
£214m.
For once, investment nr the
index-linked National Savings
Certificates, still known as
Grannie Bonds; was dull,
amounting to £79:4m in May.
Sales hod been more than £100m
for several] successive months.
WHERE THE ELITE MEET
in msHinmon.
Vi'; 1 V.' '
Midlands
• y-
motorway
repairs
INQUIRIES into whether
repairs to Midlands motor-
ways' since the 1970s “should '
or eould have been carried
out in a more effective way"
are being made by the Depart-
ment of Transport
Much of (be Midlands
motorway network Is ou
raised sections, and repairs
had to be made many years
earlier than expected.
Part of the Department's in-
' quiry will involve the sealant
coatings used to cover 5,000
hearing plinths under con-
tracts worth £460,000:'
The Department wants’ to
know, if West Midlands
County Council, which acted
as its construction agent,
altered a specification for the
application of a final protec-
tive coating From seven to two .
flays.
The eat would have meant
; contractors having to use
. expensive scaffolding for
much less time, thus saving
many thousands of pounds.
Recent failures of the coat-
ing, causing further repair
work, brought the Depart-
ment’s concern to a bead, the
■department said yesterday.
Pouring oil on the wheels of industry
A POLICY 1 - -In which indus-
trialists would help ministers
and civil servants pick poten-
tial Winners -that oped slate
financial support was launched
at the weekend by the Social
Democratic Party.
' The main proposals of this
cautiously interventionist policy
are m a discussion document In
which tiie SDP calls for a
scheme -ot cheap loans for
special industrial projects, and
the --formation of a new minis-
terial committee on industry
headed by the Prime Minister
and advised by a team of indus-
trialists.
Training
State aid would-be provided
in key sectors, and the British
Technology Group (BTG) would
be enlarged. . Small businesses
would receive special help.
The National Economic De-,
velopraent Council, and its -office
-would be enlarged slightly and
given a more industrial role.
Training in companies would
be encouraged through a' re-
missable tax system. In indus-
tries where training boards are
abolished, companies spending
more than a set amount on
training would receive a gov-
ernment rebate, while those
spending less would be taxed:
On competition policy, the
onus of proof on monopolies
would be reversed, so that com-
panies planning a merger
would have to demonstrate the
advantage to the public interest
of such a move. New methods
of monitoring, nationalised in-
dustries which have a monopoly
would also be 'developed, pos-
sibly with the creation of a
series of holding companies,
standing between the govern-
ment and the industries.
Each of the holding com-
panies would be in overall
charge of running a number of
the industries in certain sec-
tors, such as transport and
energy.
The policy differs little in
many areas from an amalga-
mation of the Government’s ap-
proach under Mr Patrick Jan-
kln. Industry Secretary, and the
industrial strategy developed
in the second half of the last
Labour government’s term of
office.
But the Social Democrat
leaders say they have an ad-
vantage in that they would con-
sciously start out with such pro-
posals. " This is a unique policy
document because, it won’t
need a U-turn within two years
to make sense of it.” sard Mr
David Sainsbury. finance direc-
tor of J. Sainsbury, and a mem-
ber of the SDP national steer-
ing committee.
Mr Sainsbury helped draft the
proposals under the chairman-
ship of Mr William Rodgers,
one of the SDPe founders.
Mr Rodgers said: “We en-
visage a partnership between
the Government and industry
and the City, to include com-
merce in (he widest sense.
"Our aim is to make the
economic and industrial re-
generation of Britain the centra]
and first task of an Alliance
government. We aim to make
the- mixed economy work —
neither of the main parties do
Thai."
Panel
A policy analysis unit of civil
servants and traders would back
up the Prime Minister’s new
industrial committee. The unit
would be similar to the informa-
tion technology unit created last
year in the Cabinet Office.
An advisory panel for in-
dustrial policy is proposed to
provide an interface between
government and industry. It
would consist of 10 to 12
"senior people from industry”
including leaders of the British
Technology Group and of an
Industrial Credit Corporation,
which might be set up to run
the cheap credit scheme.
This panel would provide
advice and support for the
Government similar to that
supplied now on high technology
by the Advisory Council on
Advanced Research and De-
velopment IACARD).
Th? NEDC would be used as
a '■ national forum in which the
principles of .the industrial
strategy can be debated and
general agreement secured.”
Its primary role would be to
debate industrial policy, but it
may also discuss pay. The docu-
ment say s its members' would
include the long term savings
institutions and the chairmen
of the BTG and Industrial
Credit Corporation.
The National Economic
Development Office would be
given more responsibility for
monitoring industrial and
trading performance, including
publication of an annual report
“ assessing the immediate past “
and presenting short and
mpdium-term forecasts.
These various committees and
organisations would help
develop "a view about the
strntepic situation and ornspecls
in major sectors of industry."
This would lead to projects
“ deemed worthy of support "
Heine nicked for help in the
industrial' credit scheme, which
roiolit provide interest relief
“rants and subsidised loans
R per lower than current
intni-fst rates.
Th«* profoerts gaueed for
cewnrs of industry would be
u«"d to “ inform nil govern-
ment nancies gating *n the
r>.F industry, not on’v
thnco d^ect'v *wmin°ine ou it.
such as public purchaeing.
funds fnr investment, assistance
for j-e«:«»arf*h and development,
and training, hut also more
oerterallv touching for example
on the orientation of the educa-
tion system.”
"The strategy* must be
formulated and implemented
■on the basis of partnership
between the different interests
Involved." says the document.
"There should be no attempt
to draw up a grand plan in the
sense of a detailed blueprint
for the development of all parts
of the industrial economy, but
rather a gradual development
of a policy within each specific
sector, informed by an overall
view of the sort of developments
.to be encouraged.”
Selectivity
There would need to he an
element of "selectivity in the
industrial strategy, though in
terms of generic technologies
rather than traditional product
areas.”
These remarks show how the
SDP is trying to develop an .
overall industrial policy with- :
out appearing too intervention-
ist and without being accused
of planning to use ministers ,
and civil servants to pick indus- i
trial projects which would be
flooded with government funds.
But Mr Sainsbury admitted
when the document was
launched that the detailed
operation of aid schemes might
be little different in practice
from those run by the Industry'
Department in areas such as
robotics.
Partnership for Prosperity. A
strategy for industrial success.
Green Paper No. 2. SDP, 4 1
Coicley Street , London . SW1. 1
Albyn House is Conoco’s Northern
Operations training centre. •
Step into an air-conditioned room there
and you step into the control room of an oil
platform 120 miles out in the North Sea.
Even operational noise has been recreated bv
a Redifmsion Simulator.
The simulator allows Conoco operators
to gain experience in dealing with any
type of production situation, including
emergencies, without risk to personnel or to
■the platform arid without losing valuable
oil production.
To train operator, the simulator was
built ahead of the platform it recreates. As
an additional benefit, it can be used to
assess the likely effects of changes in plant
and procedures as more becomes known
about the performance of the oil field itself.
It’s one of many spin-offs from
Rediffusion’s aircraft flight simulatbrs and
it’s typical of the way Rediffusion puts elec-
tronics to work.
As a leading British electronics company
with a £250 million turnover, we’re equally
for ahead in communications, TV, recorded
music, desk top Teleputers and navigation
systems.
We’re heavily involved in British Tele-
com’s National ‘Paging 3 system for example.
We desigried and installed the intercoms,
sound systems, closed circuit TV and record-
ing studio in London’s superb new Barbican
Arts and Conference Centre.
Currently we’re in the forefront of
video programming and the development
of national cable TV in the UK.
If ybu would like to know more about
Rediffusion, write for a brochure to the
address below.
Moving the North Sea is nothing to
what we’re planning for you next.
flEDIFFUSION, CARLTON HOUSE, LOWER REGENT STREET; LONDON SW1Y 4LS.
WEVE MOVED
THE NORTH SEA
INTO ALBYN
HOUSE, ABERDEEN.
•Financial- Times- Mori'day* June >81 1982
(incorporated m and wider the lacs of Bermuda aith limited HabUity )
Offer of 1,000,000 shares of US$1 par value each at an issue price
payable in M on application
. - A,Vki‘ r -' ----- •' i --
rp ; > -v *
The issue
rates sped!
issue price an initial charge of 50 costs per share payable to Securities Selection IitiUtedCthe Manager*) bnt reallowance will be made to applicants by the Manager at the
specified below under Issue of Shares’ on applications for 10,000 shares or more. The Manager is aware that applications will be made for Xoo^ooo shares, which will be allotted in fuH» :
Tb« distribution of thn docuraenr and ihe offoinj; of share* nuy be romcicd in totainxiimdicrkms,
pawns into whose posesaan this document conn are required by the Compear to inform
themselves W ind ro observe an_v such restrictions. (a particular this document oar not be used for
i!w purpose ofan offer or solidnnoa in any jurisdiction or in ray arctrantwces in which neb ofler-
or solidtznaa a oat authorised.
The shares hare not been registered tinder the United Scut* Securities Act ofl933at»d our not be
ditectlr or indirectly offered or sold m the Untied States of America, or any of in territories or
possessions <* areas mbject toil* iiuisdioion. or to or for the benefit oTa United States person. For
this purpose United States person includes* national or resideni of the United Soto of Ame rica,
.mrmrrihinnmniscd or cmtmc in «nr gate, tenttotv or posse s sion of the United Sure* of America
or possession tncreoi. I De attcniMu ot i nitre amn persons u or-iwu m m
‘Restrictions on Holdings' and the compulsory redemption powers of the Company mentioned
All references to 'dollars' and the sign ‘S' in this document ire, except where the context otherwise
requires, n the currency of the United States of America.
Aav information given or representations made by any dealer, salesman ot other person and not
contained herein should be regarded as unauthorised and should aarorduigly not be relied upon.
Neither the delivery of this document nor the offer, issue or sal e of sham shall, under any
circumstances, constitute a representation that the information given in this document is correct as
afanr rime subsequent to the date hereof This document is iasnedsoldy /or the purpose ed'thciniiial
oiler of 1 JMOJWO ihares in the Company. A separ ate prospectus will be wued fee subsequent offers
and copies thereof will be available Grom i he Manager.
Patemu) subscribers of shares in the Company should inform themselves a* to (a] the possible tax
cocaoqucncesdbl the legal requirements and fcl roy foreign exch a n ge restrictions or exchange comm]
requirement* which thev might encounter under the laws of the countries of their citizenship,
residence or domicile and which might be idevani to [hesabtaiymon, betting and disposal ofshares
in the Companj .
Directors
GE5TO CHARLES RANALD fPresidtrer c*c" OtairmanX L'Annoooade, "Avenue de L' Anoooaade,
MC. Monaco
NORMAN JAMES HO LB ROW (I'ut-PrfuJex/l, Bank or Bermuda Building, Front Sitter,
HamUron, Bermuda. • ■
JOHN GWILYM HEMINGWAY, t ■) Boulevard ds Suisse, M.C. Monaco.
ANTHONY EVELYN HEPPER, 70 Earon Place.Londoo SW1X8AT.
WILLIAM DONALD THOMSON, Bank oTBcrmuda Building, From Socct, Hamilton, Bermuda.
Manager
Securities Selection Limned,
Bank of Bermuda Building.
Front Sneer, Hamilton, Bermuda.
Stockbroker*
Haase Covets Limned,
Heron House.
319/325 High Holborn,
Londoo WC1 V 77B.
Investment Adviser*
Drayton Monngu Portfolio
Mina genian Limited,
1 IT. Old Broad Street,
London EC2N 1AL.
Auditors
Peat, Marwick, Mitchell it Co..
Valla Building.
H amilten, Bermuda.
Custodian, Bankers.
Registrar and Transfer Agent
The Bank of Bermuda Limited,
Bank of Bermuda Building,
From Street,
Hanrilion. Bermuda.
Secretary and Registered Office
Sylvia G. MarshalL
Bank of Bermuda Building,
From Street,
Homihoo, Bermuda.
Subscription and
Redemption Agent*
The Bank ofBermuda
(Guernsey) Limiied,
Bermuda HoqU.
Legal Adviser* for the Company
Conyers. Dill & Forman,
Qanmdna House,
Church Street.
Hamilton, Bermuda.
St. Julian’s Avenue,
h:. Peter Pon, Guerr
hi. Peter Pon, Guernsey,
Channel Islands.
Legal Adviser* for the Issue
Slaughter and May.
35 Bastaghall Street,
London EC2V5DB.
Introduction
Tkt Company
The Company was incorporated wuh fanned tiabUny in and under the laws of Bermuda on 3rd June
1 9S2. The Company nan open -ended investment company in that ir may issue and redeem ns shares
at paces based on the value of its na nseu.
Purpose
The purpose of the Company will he to operate i* a manag ed currency limd in order to provide
investors with a medium i trough which they can invest indirectly in bank deposit; and moaerary
instruments denominated in various curreade. The aim ot" the Directors will be to proride a
ia infra ary total rerura for imeston in lerms of capital appreciation and income.
Manager
The Company will be m anaged by Securities Selection Limned and the investment adviser to the
Manager will be Drayton Monngu Portfolio Management Limited ("Drayton Monngu'}.
hint and Redemption of Shorn
Shares ui the Company will be available tor issue at weekly intervals and mav normally be redeemed
at inch uuervals. The share capital ot the Company a denominated m United States dollars but
arrangements can be made whereby subscription moneys and rede m ption proceeds may be returned
in other currencies (for details see below under 'Issue of Shares', ‘Procedure for Application' and
•Redemption of Shares'!.
Dividends
Dividends will be paid bythe Company, normally once a year, without deducritm or withholding
of taxes under present law.
Charges and brokerage
.An initial charge, not exceeding 5 percent of the gross proceeds of issue of shares, is payable to the
Manager on such issue out of which the Manager may make a reallowance id investor* sad pay
brokerage w intermediaries (for details sec below under *hne otShareaT. The Manager is also entitled
ro receive a fee at the me of 1-375 per cent, per annum of the net assa value of the Company (for
details see below under ‘Charges and Expenses’).
Aft* Excruntfc Latins
Application tun been made to the Council ofThe Stock Exchange hr the whole of the share capital
ol the Company to be issued to be admitted to the Official List.
Investment policy
The obnerivr ofthe Company is to provide muta tors with a c on ve nien t and tffident way in which
to invest indirectly in a managed ponfolwofbanh deposits and monetary inwrumems denominated
in various currencies under connimoui professional auperviaxm. The aim of the Directon vrill be
to pro ride a satisfactory total return for ifureholdera in terms of capital appreciation and income.
Investments mav be d en ot n i rate d in USdcflara, pounds n eriin g.itaflidicniarb, Swiss francs. Dutch
guilders, French francs, Japanese yen, Canadian dollars and any other freely marketable currency.
There will be no restrictions aa the holding of Investments denominated In anyone currency and
it is not the policy of the Director; that a diversified portfolio should necessarily be held. The
measurement of capital appreciation ofthe Company 1 * investments will be against the US dollar banc
measurement of capital appreciation ofthe Company’s investments will be against the US dollar being
the currency in which the share capita] ofthe Company is denominated. Investments will be rude
in bank deposits, treasury bills, certificates of deposit and other monetary instruments haring a
maturity of not more than ninety days.
Within tta overall policy, the Directors will make investment* so u to ensure char the Company
retain* sufficient flexMlity retake ad**n»gc of expected movements m the foreign exchange market
and to mem requests for redemption ofshares. The income earn ed may be ccpcaed to fluctuate in
line with the short-term interest ratea ot the selected currencies.
It ii the policy of the Director* to establish and keep under renew specific credit brans for each bank
and ins ora don with which investments or deposits vrill be made or placed in order to ensure a
reasonable spread of risk.
Foraard Currency Contracts
Use may be made from rime to time of the forward market in currencies, bur forward contract* will
mu be entered into baring a life greater than ninety days. The use of forward markets penults an
exposure to the future movement of a currency and it esn introduce an element of gening or leverage
because it does not oceeashaic an immediate financial outlay. When the purpose of i forward
Transaction is to protea against the decline la value ofan etdsriog isaenmd while that asset is retained
bythe Company ibseo, however, no Introduction of gearing or leverage. The policy of the Directors
wiUbeto limit ihc aggr e gate of the ittouors payable under forward par chase contract* outstanding
at any one rime (afterdcouaing amount* held or set aside in the relevant currency to cover amounts
so payable in that currency) and the amount of iny borrowings to not mare than 10*1 of the value
ofthe net assets ofthe Company. It is oot the mtcnrioo ofthe Directors that borrowings should be
made other than for tbon-term purpose*.
It is the policy of the Directors thai the Company should not trade in currency futures contracts or
financial futures contracts but the Directors will keep this policy under review and win notify
shareholders before any change in (his potter ia implemented.
Potential investors should be aware that the value of ihares in the Company, and the income derived
from them, mayftll as well as rise.
Dividend policy
Interest earned on deposits or received from other investments, and the return earned from money •
market instruments purchased at a discount to their £ice value which do not bear i rate of fattens,
will.be taken to revenue.
be distributed to shareholder* as dividend-Tbe first dividend win be psyakilt(Ki 30th Junei/sSlfri
respect ofthe accounting period coding on 31st May 1983.
The level of distributable income may be expected to wv m line with ihon-cera mieresr rates of
the sekoed currencies and the tateaf dividend poyabl din toy year will not necessarily be mauuained
in future rears. Not more then one dividend wDI be payable id respect of each financial rear. Such
dividends win normally be paid in June in each year.
Investment management
The Director; ofthe Company will be responsible forthc overall investment policy ol the Company.
The Manager bsa beat ippoi nred under i Management Agreement dated . 16th June 1 W2, as manager
ofthe Com piny with rcsponsiblUiy for selection of investments and the ■hg'-iD-day management of
the Company.
The Management Agreement between the Company and the Manqer will attain ue in force for a
period of three yttn frua hi date and [bcraflcrnoles rad until derernrinal by either pany giving
;o the oritcr rot fas than tax nwolhs'wrincniMtlec. The Manager ii entitled toretnn the nrftkl charge
nude in respect ofthe issue of shires in the Company and to receive a quarterly muqpsmn: fix (for
details see below under ‘Charges and Eipancs).
Under the Management Agrcaacnu the Manager laobligsdratenia the service* ofan inreauatitt
adviser or mvesnaou odrtsen, acceptable to the Dj ireasn and to the Bermuda Alonetaiy Authority
Foreign Exchange Control, to advise as m the in venmem of the assets of die Company.
Montagu as ha investment adviser to 4 period of three years and thereafter unless md until
determined by either pany pring w the othtf not lea thaata moaibi'wiHtea notice. ^ The f«s and'
espemes ofDriytou Maltigu will bt borne by the Mmagerlfor dctaifaaee below under 'Charges
and Expenses').
The Manage is a company incorpo rate d on lS&Jnnc 1 952 in and nadcr the hw; ofBermuda with
limited liabflity. The duvtom ofthe Manager arc Mr Ranald, Mr Hoihi uw (who are both directors
nf the Componv), Mr Charles F. Hoare and Mr James H. ?. Matters. The issued s h are capital of
the Manager is' Si 3,000 the whole of which is baiefiriaUy owned by Ranald Consul tana Limited,
i company registered in Hong Kong wii'n hauled liability, the whole of the ished share capital of
which is owned by Mr Ranald who Is iu sole director.
Dinxctm ojtht Company
Mr Ranald feged 4G) is a resident of Monaco, haring emigrated from ihe United Kingdom in 1 97 K
■Mr Ranald was a (bunder shareholder of the management companies of the Castle Baumia Group
of Unit Trusts and was Qiaumari and Managing Director of those companies from 19b4 to 1969
when his controlling mterens in the management com panics were mid io another unit rrust
management group. At the rime of the tale the management companies bad fimda under manag em ent
«f ennui fifl i nog.QOO. Since rial Hwii Mr Banald hahegnenpgedmpnvawmv mimm i muHp F ruw
id Fiance and in 1980 wuravolved in the ibnnanoo and IstuKfaofacunencyunictrmm the Cbanael
Island*.
It anr appliearioo is nor auepted in whole or in put.The application money or the balance thereof
vwlltwitr um e d fwithommietest) in doHairthroogji the pow at the risk Qftncapplicain.'nie right
reptescit all ch*qncs foe payment oo receipt is reserved and nosh ate tertiBc ata w ill be bated or
scat nor aces* appbcaaoa owner returned pending clearance of an applicant's cheque - Due
omipletion and ddmay ot'ihc applicarion tom accompanied by a cheque will cansriritte an
nn»fa* wM^ ri,n,rf»fiir«p>.Mjirhgp3M on fli er pregentanon and attearioa b drewn to rite de duiiti o u
u the appfirarion farm to that effect.
Share cesrificareswrU be forwnded ooi laertban 3 1 st July loaTatiheriik ofthe pereoafs) entitled
tberou. by. ordinary post to the persoofskm whose nme(ii the shares are to be regiKcred v a in the
caw of joint holders, to the first named bolder »t bis regimered address.
Mr Hemingway (aged 51) pracriws as a wlicii or and financial adviser on on intenutioiul basis with
office; ro Monaco and London Hers she a director of a number oTcompaiiiabodi public andpnvate ■
id Europe and North America.
Mr Hcppcr (aged 59} » Chairman of Richaidwas tea parch P.LC. and a dinsnor of three other -
pnblfo companies, two of which are investment trust comfumcs.
Mr Hotbrow (^ged 54) a an Asrisnm General Manager, T run at The Bank of Bermuda limiied.
Air Thomson (aged 5 1 } is Deputy General Manager, Iniemauooai at The Bank ofBcramdi Limbed.
T Vx iTkm uy| stamp den^
Dmaori of the A {onager
Mr Ranald and Mr Holbiuw ore also dnecton ofthe Manager.
Mr Hoare (aged 50) was a director of the management companies of the Conic Britannia Group of
L' nil Trusts prior io the side of their share capital u J 969. From 1975 until 1978 he was a
L ait Trusts pnorioUKsse at uietr share cxpttaiujvov. from ivonmii t wane was a managing
director of® ardley I -imiirri. the nboliy-owocd merchant banking subsidiary m Hong KongnfThc
Hongkong and Shanghai Banking Corporation. He u oon-cxecuu** Chairman of Gem Gross 7LC
and Managing Director nf and owns Corinrh Finance Limited- a Hong Kong company, which :
provides luuncial advice principally ra companies operating Oiundr the United Kjngdmn.
Mr Masters (aged 34) is Manager, T teasury at The Bank of Bermuda Limited.
. InzaiBuau Adsuer
Drayton Montagu is the wholly-owned in vestmem managemcm subeidiary of Samuel Montagu te ■
Co. Liinued, the ultinare holing company of which is Midland Bank pic. Asm 30th April 1983.
Dre n on Monueu bad under us iruuaeunem tirnds of approxututeiv hi .400 millton and a f ur t he r
Dm vi on Montagu bad under us tnanagemem hinds of appmonuteiv Li -400 mil lion and a further."
amount oTsoraeLJ,500 million m respect of vriiuhh provided investment advice SainueJ Montagu ■
& Co. Limited may enter into currency and other rramaeriont with the Company and will not be ■
accountable toe any profit* on its pan arising r herefrom.
Charges and expenses
Under the terms of the Management Agreement referred to above, the Manager will be cnriiled to--
" recejveanmiiialdurgear arete not exceeding SpfrcMit.ofthegroKprnceedsofimirofsIiaresby '
i he Company and a fee, payable quarterly ■ calculated 11 the rate of 1 ■ 175 per con . per annum ofthe
average weekly net zsscr value ofthe Company (calculated at accordance wirh the Bye-laws). The -
Manager n also entitled to be lamburxd expemes tup to i nmuuum of 51,500) mairrcdin
connecuon with the formation ofthe Company. The Manager will be responsible for and trill bear
the feroofDreymn Montagu and any other invest mem adviser orany agent U appmmt. The Manager
wifi also bear the cos of providing accounting and certain administrative services to (be Company
including i be cow of the weekly calculation ofthe net asset value per share.
The- .Manager may at iu disemioo make reoDowzzwe and/or pay commisnon or brokerage ra invesion
or to investors’ agents or other intermediaries through whom application* for shares arc r e ce ived.
Sucfa reaDowanccjCOmmistloti or brokerage may be made or pouf on issue ofthe shares andta tt
intervals thereafter in respea ot'the period diuing which the investment is auintaiaed with the
Company. The ™k»"g or paymem of such reallowance, comminioa or brokerage is the mle
respansUriliiy ofthe Akanagm and amounts BO paid will be borne by the Manager oat aTin own
rexmrets. Detaibofthe reallowance, commission and brokerage to be nude or pud by the Manager
in respea of applications received pursuant to this initial issue are set out under Tssne ofShares'
hdow.
ij miift i rar, estate duty or in b e ri mnee tax payable by the Company or u* ih ir f hold ers other then
sherehotders ordinarily resident in Bermuda.
By rirrae ofthe Exempted Undetaku^i Tax Froreawn Aa J 966 (as amended), the Aiimster oT
ntwiice ofBermuda has given an uhdcrufcmg tbm, io the event of ihere bring atacted in Bermuda
any irg^ | °ri"" imposing rex computed on profits or income, or computed on any capital assess- gain
or appreriaocc, or any tav in the naruicofesutedutj or inheritance tar- such tax shad are until 28ih -
~ March 2006 bcappUtabfctoibc Co mpa n y or to any of its uper a t t o n s, or to the shares, debentures
be qi her obligations ofthe Company except insular as such tax appEm to peraonsiKdiaareiyresidetu
m Bermuda n yl ttdvBTureig other obli gamma of the Company m any lond
Ictned « let ro the Company.
As on nempsed compart* 1 , however, the Company is liable ra a fixed annual payment to ibe Bermuda
Government which s currently BD&L250. *
Sremp.duiy at rhe rate ofO-25 per cent, on the nominal *aiue of the Company's initial auihorried
■dure capnal and on any iiureaie therein and sump duty at the rate of 0-1 percent, on the excess nl
the subscription prtce over the cornual value in respea of fhe muui iwue of a share is payrirte by
. the Company in Bermuda.
Iriithe hueorion ofihc Ditnaon that, set far as possiMe, investment should be made in Mcnriries
and dopouu in a way which will secure that interest thereon is rceeived without dedoawu m my
■ w irh^mtHi n^iww hnpna-^f by tybr* rimfluig. 9Chhholdiiig taxes deducted will Mt be iwUltmblC. .
'Itisihe imenrion of rhe Directors That neither the central m a nagem ent and control ooir thcday-io-
dav management oT the Company will be undertaken m the United Kingdom- Accordingly, the
■ Company should not be rerideth hi the United Kingdom for taxation purpose*. The Company should
not, tberriure, be liable to L'nucd Kingdom corporation Ui on us income or gain*.
Rnl yyT m ihrivfodjv 1 ** 1 ! 1 (prat Iffl l fj ni ' l ‘*'hari-hrtldi3'* redden ! in the L'nitcd Kingdom for taxation
purpose* will hr liable to .United Kingdom iocume tax or corporacxni tax in respea of dividends or
other uwmnedistTilmtKica oftbe Coopany aixi. unless bolding shires as dealing stock when c&flerenr
tile* appty, will norma Ry be hriile to Unhed Khncdom cantml pun* tax « corporation ra in tespfca
of gams irisnie from ibw safe, reoempoon ordwposaJ ofshares.
Cfekrcnre under sconra 464 of the Income and Corporation Taxes Act, 1970, (the Taxes Actlol
ihcUmieri Kingdom IcwnodlacioiieS' i ox advantages from certain transaction; in securities] has been -
gxwn by the United Kingdom Board oflnland Revenue hi reiarion to the issue ire the Componyof-
sharcsTor cash, the subsequent de of such shares to the Manager or on The SroA E xchang e and
the rtdonprion of such ihares by the Company.
T lw nOfTT rirm nf mCv irinah wrTt hu r i ly rn u dent m rhe United Kingdom is drawn 10 lection 478 Df
thcToxra Act a* amended twihe Finance Aa, 1981 which may reader them liable to mcome rex in
resperi ofthe prop o rt i o u aie' pan ofthe undinribmed income ofthe Company attributable to their
hojdhig* of shares.
' The foregoing » based on the taw and practice currently in foroe and is tnhied to changes therein.
Imjcfmnihoald consult their prafisshmal advnen on the pamiblc tax conscqaences af bnving,
hawng or idling shares in the Company under the taws oTihrar country of ritl 2 enship, reiidenai
of domicile.
principal icaciueyrngiitctoa wthch tBBiip ti Se sB t ponioupf tfiefa vrwtpfBn qfflthpn^Miy ia .
lined, quoted, traded ordesir in is closed (other ^ban cwrodrary ritxkeml andhofifey donnej ot
tiadiug on any such maria is uwcrtally restricted, or (b)whenataihiB*j«ie»ira»a radlt ofjrtncfc 1
so Ihe opinion of foe Director* Ir is not reaionably prooicabk -foribe Company, wdi^iaie.of
invonuenu owned hv it* os 4 ranlt «f wUch snyroh dispqnlwinld Ee nnieMllrpre»&ial
icdiireiK>ldmorf^^rficnibreakdft^<tfdig*ui^yofthej)cifli rtW i n^ eiapk)y^tlUgcnAiMig
the nine of mvmtinawa or when for anymhn reason the value of my of foe ura wnh enttor other,
asaeu ofthe Compan/caniiDireaHmabtv pr (airiytease moincd orTdl during which foe Company
is unable lo rejwirou! fimda for the parposeof makfogpaymciin on tberaJaDpoonoTslaresor during
which any tranafet of fund) iprotred m ihtrealisaiionor ssspusirim qfMimnpenu.w paynuataduc
on redenqititBi ofshares carnal jo the opihibo of(he PjrecBWbe effeaed arpooasl rates of rariany.:
No shares mav be isaued or redeemed during sucfa i pm^;«fxu^chfMn, Ndjxnqfwyshch
auspensna milhegnqsbytbePtn^reiroasiyshandsoiderteoderiii^hbilKraforredempfidn
and will abo be publrsbed I'tvtfae FmaodaiTimeutnd the Iptetwiional HoaldTribm»andintay
otherorey that the Dire cto r na y wwhier ^iprapnae.^. r. "■ •• •• ; ' v . •
The Bye-fawa provide that xny certificate as .jo dw.ua asset ridne^iwaigrornnbejiatfbfrhe Dneton.-
in good firitfa is condusxve. . A i. i •:.* * J
Share Cenifitaus ■ '■ •• ■'
InacconiaiiceMtiiBennudfl law. share cerciiTcates will only be issued airiicuariKSQfajOipmiie*, -
pstroenhipi or indlridiial*u-In ih«*se«f»ii applicate. seringia a sperial capacity (for example, as
anexe uuut ih un ited. ceiBficacnaiy. at the rfaplMiof ihc^phaiiLitCTiri rhrrapgity inwhiriir-
. inch ippbcxm a acting. Share* pmebmedfot* *ose under 2 1 yefrwilage mitathi n^tinaedinihe
name ofthe parent « guardian, brn maybe deMgnaredwnhtheminor’iraitlabfor the purpose of i
idemificacioa. ■ ' .• i ■ s ■ ■
or under a trust m Bermuda. Deixih’ of these frdllti**, ’
o blamed from the Bisk. -
i are provided^ihe ^tuikg can be
Transfer of Starts ' • • • 'S * ■ T-."---"'-" ■’ ' " - ; >'■
Shares are trenoforehle fcv lMrankn in writing sgucdfiy.for.inthtaise oftnagsfovbyabodv - - -i-
corpocwe, signed on behohof or leafedbj^ the tmaforoc and rtgjisitredni the RtgtwtfoCShaithohlea .. ;
of rhe Can^any. The Dtredors may decline r6 ttgjscr anyBxnrf&' c £ states oserihidh foe Compmy ”
1» a hai and may also decline wrccoetusqattyiriitnmi^(kipfnaa*foi;«p*a*1iis«fc}5ffiiHedirdit . T
office rftlttCijmpknyix: ruck other plsee rs the- Dtrecnrremryjpp^ui, jetton pm rati by acertlficne *.'•
for the shares to whictui relate*, and snefa ocher e wden e n at the Directonmay reaonriiiy require "
to show the tight ofthe transferor to make the uaufo.’^pirecmnmttyaulibtatoohnoKrettan \
impend the rcginreiion of traorien. Wr not .moreihan iiqtal o£a» tfoysni any year. In the esse t»T " •
the deafoofaty-tmcoffouitshireholder*, ihe mrrivwmw m -T w w'wi a bc ilKou^p i a - suu or persons
rect^mised by the Crenhany si 'hiving any title ro the interest ofthe Aocchscd joint sfaarvfaoldet in
the ihares rtgisieredm the names of such joint startbeiders.
Shares euy be bought and sold on The Stock Exchange wirhnifr iJfc need to comply .with (be f
resnetioos referred to show as to the minimum mjmbCTOfshJimhdtt
Exchange Control - . L' .
The Gonspaisy has been datsified as non-rewdent of tfip"Bermnda ^pebange Control are# by the •
Bemmda Mcmcmry Authority Foreign Exchange ComrnL'whose peruasswo forthc issue of shares
in the Company has been obtained subject" to. the condition that ibc'xppohnrocm of my new
invemnem adviser Micp^DraynmAtontagtvihuuidhavniapaiarVpiBreL The transfer of ihxrm -
beiwoen perron regarded a* resident outsitfe Bcnapdafor eiriim^imprioljmippses and theiwue
and redemption ofshares to orb}- such person* nay be fcfieettd whhtnnapeaficconsaa trader ihe
Bemmdi Exchange CantrolActi972aiidi^ula(idui mode pjerenodor. Bsaesand traittferrnttul ring'
any person regarded as resident in Bermuda pa ewlamgc control purpose! require specific prior
authorisation under tbit Act.
Under current Bermuda fepiknsoa a taoitot^fcrc5 ; 'afheret3wniid«nr is resident inBepbodi . -
for the purposei of theE^mi^ Control Riegilaifcau l#73, mroebb sampedstthe me af onehajf
of one percent, of the comdenrion foe the transfer." . • <.-■ "
Reports and Accounts
Drayton Monopr will be endt led to receive from the Manager a fee, payaMe quarter hr, calculated
at the rate of 0'375 per cent, per annum of the avenge weekly no aueL value ofthe Company.
Each of the Directors of the Company will be entitled to receive a* r emu ner a t ion from the Company
such atnoom a* the Board may determine, provided that the aggregate of such amoimu shall not
exceed 5143X10 per annum unless otherwise resolved by the Company in general meenng. The '
Director* may oho he pud all travelling, hotel and other expenses properly incurred by (hem in -
attending meetings of rhe Cornronr.
Redemption of share*
Sntjwisi. iirsn(iMcm A -Mmi M tim nit hr net aw valmnflhgUiwnpMy |«w4«-lHiwwnder
'Prices and Net Asset Vahie*) and mbiea as aentioned bdow. shares may be redeemed by lending
a leper requesting redemption, accompanied fry rhe »haic cmifkaiei in respect of the shares to lx
redri t med . dthertoTbe toik ofBermuda Lmdted in Beamnda The Bank nfBcrcimda (Guernsey)
United in Gnenuev."
be sent to shareholders at their regehaed addresses nof ta* than 2t days bdont the date fixed for
the general meepngorthe Company at which they wiU be considered. S ha rehoh f ei* wfitabobeeatt -
. cogges of a half-yearly report on the" Company and thehalfyearlyunaudiieAfinancialimieBcniMfi.
the Compjny mode up to 30th November m roch year. . •" r i
attending meenngs of the Company.
As cunoduui, The Bank ofBertnudaLimiied f tbc Bank 1 will be entitled to receive fees radially at -
the rale of £H '5 percent, pa annum orihe average weekly net ossa value of I be Company and at
the rate of 0-1 25 per cent ol" the consideration for each transact ion effected lot the account of the
Company (up to ■ maximum of 5 35ttpcr iiem). The Bank is also entitled to be reimbursed n> um-
of-poeket expense*.
The Company will, in addition rathe tees and expenses payable to rhe Manager, the Dtreamand
the Bank as cuuodian, bear alius operating exprows including the fees and expenses on he Bank
in its capacities is secretaries, registrar and transfer agent, of the auditors of ihe Company and 01‘thc
legal adviser, to rhe Company ’i be cans ot" print rag and liwnbunng the halfyeariy and aimual repqru
ami statement*, the annual company registration fee payable in Bermuda, stamp durv an itsslure-
capliaL The Stock Exchange hiring fees, the corns of publishing share prices and all dealing expenses ■
and commiasum.T."
Thciedcinprian snil be efleaed on the next Subscription Day ifrtae request is so received three days
before the Vahnrioo Day preceding that Subscription Day or in any whei case on the second
fiotisenpdon Day after inch receipt ofthe reqoeat. For :ha purpose notices recaved after 10 a.m.
(Berinuda nme) im any day. or on a day which is run a bu»ne» day in Bennuda. will be deemed to
have been received on the next business day. A shareholder redeeming shares will be paid the
Rcdemppoa Price per share on ihe Subsenpnoa Day on which foe redempboo is efleaed, i be method
ofcriciiUtiog which is described below uudex ’Prices and Net Asia Value'. Subject as mentioned
above, the Bye-laws provide that the Redempuoq Trice will be paid to the redeeming shareholder
in djflai* within 7 days of the relevant Subscription Day.
, Redemption of part ofthe bolding of share* wifi be permitted provided it would not result in a
shareholder remaining regisiered as the holder ofshares the aggregate redemption price nf which ■
on tbc relcvam Subwc n pi iw Day would be k» than S 30,000. In the case of a partial redemption,
‘a balance certificate will be scru m the some time as piyment b made lor the redeemed shares.
Grams/ Meetings .' ’■ '
Themnual general meeting of shatehbMwvofihe C q t u p xn y w iU be hdd (bribe petpom,iwerajBt, V
ofcooridenng the indued financial natemeoa ot’the Campnayun Bermuda or such ocher location" y> -
as the Directors of" Ae Company may frfiro time UTOme detenu inerVoores'conremhg the annual - * "-
general meeting (together with the'anntaFrepoh sad minimi of the Company! wifi be. sent to
sbandmldersmib«rreguteredaddraBaDCgla(.crfiiaa2i days before the dve fixed for the nireliuc..
Other genrrai meenngs may be cooycned fiom nme to ante by thcDirenors by mdinciuiticet to
sharehoMers at their registered addfeases. ! -
Auditors' Report - ... •"
The foOowing is « cvpy oi'^ report received fiomPfeat, .Marwick, .MotfocO & Co.jUhsnend
Acoouotaoo, the auditors of the Company: "— . ■" •
..' ViDitBiifidiflgt . .■ * ■’*■ -.
' . . , , • ’• "Homfinui; - ' . .i
- • " ' ! • . 3ynnuda,. ..
The cons and expenses incurred io connection with the formation of ihe Company, the preparation
and publication of tins document, the initial issue ofshares in ihc Company and the application to
The Stock Exchange for admission- of the diares to ihc Official List, excluding ihe initial charge
p a yable to die Manager bol including preliminary expenses’ of S I JM0. all legal, printing and
advmuuig costs, .the expenses of ihe Alanager and Bermuda-Kamp duty on ihe authorised share
capital ofthe Confrany are estimated mamoani IOS130JW0. In addition stamp duiy will be payable
in Bermuda as described under Taxanco and Sump Do ty'at t he rale oTfl-OO? dollan for each share
subKribcd pursnam to this ofic:. This dots- and the said costs and expenses will be borne by the
Company and ammtiaed over the first five financial year* of the Company.
Tbc' Bank of Bermuda (Guernsey) Limited whereby the dollar icdemponn money* would be
convened by The Bank of Bermuda (G uer n se y! Limited on bebalfafand for the account Of the
applicant, inra either pounds sterling, deutfchemaria or Swiss francs and remitted in that currency.
The Act of Incorporation ofthe Company profobiumre redemption being made if tbc effect thereof
would be ra reduce the aggregate par valncsofihe (hire-paid share* issued md outstanding below
. 512,000.
16th June 1982 v.
To the Directors,
FoTtxfrmd Lriniicd.
franc of share* “
The Company is making in minal ofier of 1,000,000 shares at the fixed price of 510 per share. The
procedure tor applicarion is let out below.
The wue price is J lOpcr share which includes an initial charge of 50 cents per share which will be
payable by the Cmnpanytd the Manager. The Manager wifi allow bmkeragera members afThe Stuck
Exchange, recognised banks, solicitors, accountants, insurance brokers and other protesuonal
intermediaries cm application; made hereunder bearing theft stamp at the rate oi"7S percent, of the
retrial charge", net of any reallowance, on aD shares rssunf pursuant to such appfreroona. The Manager
will give a reallowance to applicant* on applications for 10,000 shore* or more as folio**:
Cust o dian, banker*, reginar and transfer agent
The Bank has been appointed by the Company as cusrodiu ofthe investments and uninvested cash
ofthe Company, widen mrOI be held on behaifofche Company cither directly by the Bank or through
xvub-ciuradian- The Rank is also responsible for maintaining the Register a ('Shareholders and for
providing company secretarial services.
The BapkisilimizedcocBpiuiyhKarpouied in Bernuda under TheButkofBesmndaAa oil 890.
Through its rrann office or Bermndi and rhroujh whsidiariw irt Hoag Knag and Guenuey, the Bank
. as engaged in a widerange of Internationa] banktaband trust services. *
The fees and expenses of the Bank as custodian (for derails see above" under ‘Qtarges and Expenses'),
and at secretaries, rqisi nr and trandcr igem will be borne by the Company.
Gentlemen., ^
VTerqxnt that yourCompatty was inchiponBed on 3rfjnne 1982. YourCmnpatiy foil turn
coannesccd basmess and accordingly aa xCcaunuhsve been fnadc up and nadividctid) have
been declared or paid. *" ' ' %
Yours fthhfiilly, . * " .
Pear; Marwfok, Mitchell & Co.'- ’
Dr rectory - - ", _•
No Dntsaor hast service agreement wife the OBnpoiiy nor BUysach comna prapored. ADireaor
b nor required ra hold any shares by way of qualifictripnv There are oo proviaionirtqainngDireaort
to retfre at any specified age.
Each ofMr Hemingway, Mr Hepper and Mr Hoare tnaybenefirfoDinthcnxeipt from the Manager
ofbrokeragcat the wme rac and on the same terms mother proton onal iptermedaries(for detnb
see ‘issue ofShares' above).
Number of ihares
applied for
Reallowance
per share
Initial charge, net of
reallowance, per share
The Company has also appointed the Bank as its banker* on rhe latter'* normal broking Term* for
cuonmier* (a* rqprdsbaM charges, interew and other marten). As hanker* to die Company .the Bank
up to 10,000
HLOOOormore
but less titan 20JOOO
20,000 or more
wifi be responsible for implementing banking and finandil transactions for the account of tbc
Company. The Bonk nay set a* principal in an* shrh transactions with the Company and will noc
Dtreaort' RtMuomiitH
The Bye-laws enmahr provisions to Ihc following effect:
Company. The Bonk nay set a* principal in any «rh transactions with the Company and will not
be accountable for any profits on ns pan arising out of *neb transaction*.
A subsidiary of the Bank will be providing accounting and Bdmmutrauve services (including the
calculation ofthe o a asm valor per share and the maintenance oftbe Company's books) to the
Managers! ihe expense of the Manager.
Each ofthe Director* shall be paid remuneration at such rare as may from time to time be
determined by cbe Board provided rhai the segregate of afi such rem u ne r ation (excluding
amounts payable under any orin By^frw) sfiafl not ex c e ed S14JXW per annum or inch higher
anwuhi a* nay from time to rimi be determined by rcsohftUB oftbe CcmjMnym General .
Meeting. / ■ >• ■-» : ' * .
The Manager will aba pay in dollars to each profcsaionil intermediary withm 30 day* of each
anniversary ofthe launch of the Companv an annual c omm is s ion m the tale of 0-2 pes cent, of the
aggregate weekly act roet value during tie period of twelve mantis ending oa that anniversary of
all shares imued pursuant to applications made hereunder bearing rhe raampof such intermediary -
and held cannautmtty' for that period ofnrrirc months.
Payment for shares applied for must be made in rail. Any reallowance or brokerage due will be paid
in do Oars by the .Manager separately by cheque posted within 14 days after the dosing of the
subscription lists or, if bier, after clearance of the applicant's cheque.
After the ininal issue, shares nuy be issued by the Company on Subscript ion Days. The Bye-laws
ofthe Company provide that shares may not be issued at less t Inn the Subscription Pnee {as to rise
cakulation of which, see below under ' Prices and Net Asset Value’) as at the dose ofbusmcB on the
preceding Valuation Day, nor at less than their pax value.
The Subscription Price, save m respea ofthe initial issue of shares, will include an equalisation
The Bank of Bermuda (Guernsey) Linnred, a wholly-owned subsidiary of the Bank, bat agreed to
■ aa ai zmbsaiptta and redemption sgnt of the Coo^uyinGu cnmeyfori fee which wl1beimy»We
by Ihc Manager.
The Directors may be (rod all travdling.'horel and other expen s e * properly metered by them
in attending and ret utning from meetings ofthe Directors or any committee of the Direoof*
or General Meenngs of the Company or ra coaacciioo with the business of the Company.
Any Director who serves on any commits or who devout special aztenboa to'the business
ofthe Company or who otherwise performs services wbichin the opinion ofthe Director*
are outside die scope of (he onfinmy duties ofa Direa or may he'paid such coin remuneration
by way ofsabrv or otherwise ss the Directors nmy determine- -
General Information
Gras-zraifon and Share capital
The Company is an open^nded m vcsi meri t company with limiied liability which vwu incu t p ottted
in Bermuda on 3rd Jane 1982, under the provisions af an Aa ofthe Bermuda Legislature entitled
"The Fbresftmd Company Act, 1982'-
paymeat in respea of (he net undistributed income ofthe Company in order io ensure that the level
of subsequent dividends i; n« (fleeted by the issue of tb ares. The Redemption Priee per share may
mmbriy mdade an maoism in respea of the accrued mcorae of the Company up ra die date oo which
ihe redemption is effected.
Subscription Days will be every Wednesday and Valuation Day* wiU be every Tuesday (or if any
inch day is nn a business day in Bermuda , rhe next following business day) and/or such other day
or days as may from time to time be determined by the Duea or*. The Bye-laws provide Out there
shall he at least one Valuation Dav in each month.
The proem authorised share capital ofthe Gammy is 82,000,000 divided into 2,000,000 shares
' of 5 1 par vaJoe cacti of which, ajar the dare of this document 12,000 share* (being the Company" a
nuntmwn issued caphxl)havc been ifioned nil paid m the price ofSIO per share for renonaadon
as pan ofthe initial ofler ofshares. All shares are of (he same das* and, upon woe, wifi rank pari
panu amcngxjiemsdwea. The Company has power, under its Aa oTI ocorporetion, ra Uwc fractions
of one share.
Tn as ac tn mjtcuADirfCt ort tta. —
The Bye-laws coMain' provisions to the foDawing efieec
W ADireEiwoiay hold any other office or place of profit (mder rise Compan’ (other than the
office of Andhor) ip conjunction with kbafiKcoTDtrecmr or may aa ma juote»oafli capacity
to the Company on such terms tt tounure of offioe, and otherwise as.ihc Dtrecun may
determine. •
the Company cither as vendor, purebostr or otherwise, nor ibafi any such cenxraa or any
cooeriCTorarran fiei ii eni e nt ered into by or an bcialfofth e Com pony m wtochony Difcetao - .
is i«»avw^ mterened be liable »be avoided, nor shall apyDireaor so oomraalng oc being
so inmgaaed be liable ro jccoara to the Company for any profit reaHoed by any ouch contract
orarrsKcmcm by reason of such Direcxor hakfoig that ofiicc or oftbe fiduciary retotiooship
The Aa of Ineorporxnon and the Bye-laws comprise the constitution of the Companv.
The Suboorptwa Price af s/uta wifi be published daify in the Fuanciaf Times aqd us the
lmenutumal Herald Tribune and wDI be available from the Manage! on request.
Inzatment Ratnedons
The Byedaws provide that the Diroctora shall am invest any of the wet* of the Company in real
property, commodities, commoduy contract* or securities represe ntin g merchandise or rights to .
merchandise, or units, AdMiniu or shares in any trust scheme or mutual fund.
Procedure for application
Applications l"er shires mwi !»
Applications for shares must be made on the application Form formmg pen of this document. The
jxummnm subscription for each applicant u 2,000 shares.
Application* should be tent either u:
The Bank of Bermuda Limited,
Corporate Trust Department,
Bank ofBermuda Building, Hamilton, Bermuda
The Bank ofBermuda (Guernsey) Limited,
Bermuda House, St Julian's Avenue,
St. Peter Port, Guernsey, Channel Islands.
Applkati ora should be senr so as to rtacheit her such address not later than 10 ajn. (Bermuda time)
on Friday, 9th Jnly 1982. .Applications which do ooi fhlfll the conditions stated ja this document
Prices and Vtr Assa I'aht .
The Subscription Price per share in the Company it each Subscription. Dav is the n« assa value
per ahare in the Company derermined in accordance with the Bve4aws a at ihe dose offausiness on
the Vihunoa Day preceding tbc Subscription Day, plus such sum (if arty) ai the Director* may-
firr fifcil Tid p5ir»hgiff vfaichwouldbf wnffTTii
on tbc purchase of the assets of the Company, plus the hi ins] charge referred to under “Charge* and
Expenses', plus wch nun to round cbe price up to the nearest one cent per share.
The Red em ption Price per share In the Company at each Subscription Day is the og asset tufa; per.
share in ihe Company determined io accordance with the Bye-lawi as at the dose ofbuiiaess an the
Valuation Day preceding the Subscription Day, less such aa amount Iff any) as t be Direanre may
consider represents the appropriate ifiowaoce for fiscal" and sale charges which would be rncnrred
o« theaak of the assets of the Company has such amount as would round the total down ro the nearest
one can per share.
The value of the assets of Ac Company wifi be determined following the dose afbosnicss in Bamada
on each Vahtadon Day wbeh frfia on each Tuesday, or, ifui/ Tnmday is nuc a business fey in both .
Bermuda and New Yor$, on the next foOnring daj which b a burinete day in both those places. The
net asset value per ahare {■ calculated by dividing the wine of the assets ofthe Company, lea its
Ifrbihdes, fay (be toad ntimber ofshares in issue.
Tbc value ofthe assen oftbe Company and the amodntofitt liabilities will be dcuaminedbvtfir
DirtcraretaaeoirdiarewuliBye-liw 11 widchprcroka, iaiwaia, iter.
orarrangemcnr by reason of such Director bakfoig that office or oftbe fiduciary retawxnhip
ihrrebycsubHsbid, but the nature bfhfr interest must be declared by him at the meeting of
the Director* at which ihe question of entering into rhe contract or arrsngemenns firs takoi
into coosidciuian, or ifjhe Director was nor at ibe date of ihe meeting interested in tbc
proposed aroma or arrangement, then or the next meeting of rhe Directors held after he
become* so hncresied, and ui a aw wftere the Direa or becomes interested m a coo met or
arrangemem after it is made, then tt (he fim meenng of the Director* beldatier he becomes
' so interested.
ADtreoor's voting rights w respect of maroers hi which tea materially interested are restricte d
• in certain cases, but the Company has power in general meeting to suspend or relax neb
restuaioosor to ratify any transaction not duly au thorised b y r anu u nfacontiavention the re of.
Rrtmcrionx on HoUutgt
The Direaaa have the powecio i m pose suduestrioimu as they may think necosaivfar (he purpose
oi'ensaraig tint do shares ui Ihe Company arc acquired or held difeedy or beneficially (i) by any
United States person or (ii) by any pensa ta breach of the law or req ui rement* ot'anv enuntiv or
C Hi Affi I Wfngal Mflwiiv TJia Btws.1*w c fMtru* ■ TTnftwl Sfr w* im h oiwi 1 ■* IsJwn . nn u
gowenunetualaiitbwity. The Bye-laws define a Ticked Btarespertoa’ai being any penon wtfok
toatioaaLatizeno idem ofi or who is normally reridest in, rhe UmiedBrnes of America "or n*
poasmsfons m ns tes^toies orareassubjea ra Itsjnnsdicnm fmcfndhig the eme of any sochpenan
and corporationi or nanuuhipocreaicd or organiaed therein) The Byedaws provide thai i« shall
.come rathe notiee wfthe Dtreerotv that anystans ire owned direetiy or bcnefidallyhyinyUnited
Ststei tpesson or by aav other penon in coarravcntioa of any such imsKbom fa noo4pia£fiedpeaon’)
the Dtreents may give notice to such penoo reepiiring ram to transfer such shares to a person who
"is noc* nan-qualified person or to give a request in writing to rhe rakmptioo of such shares in
aroordaneewth the Bye-law*. IT any penon upon whom such a notice sroerved pursuant to this
paragraph dom not widtin thirty dajx afterroch notice transfer his sfures aa aforesaid or establish
■ra the satiafreti on of the Di reams (whose judgment shall be final and binding) that he is oor a non-
qualified penon be shall be deemed upon the cxpiiadon oT thirty days to have gftxa a request in
forthwith to Jditer to the Company or Its duly authorised agena theecrtificue or certificates to
ha dares. A nao^nalificd penon bol dhig share* moonnavennon of a ny res t ri c rion imposed bythe
TB n WfHl M fhwp Lt> rMlitiml u n Uoi ho hoe *i W I « 4v i g — wd n wO w w fc. — - - - ■
may be tticctcd and the tight is reserved u reject any application and ra accept any application in
part only.
the value of any cidi on hand or bn dr
room, eaah Addends and interest
arable, prepaid
Payment in dollars
Payment In dollars may be mide either:-
apemea, cash mrideods and interest dedared or ttsxued and not yerrecrivaddtan he deemed
to be the foil aroon mh ereofnnlem the Direc t o rs »hsD have dnomiiitd that any wdideposh.
bill, demand note or aceormt reed vable is not worth the full arnoum Ehereattn Which event '
(i) by telegraphic transfer to Chase Manhattan Bank of l Dun Manhattan Flam, New York, NY
1 00 1 S for (he account afThe Bank of Bermuda Limited iChips UID No. 0055&4 and accoont No.
001-1-067240) sob-aoesmin Forexfuad Limited and by advieeto that effea roThe BankofBennuda
Limiied or
(fi)in the case ofat appheat ion tern to The Bank ofBernmda (Guernsey) Limued, by a dofiar dieque
in fit war ofTbe Bank ofBermuda (Guernsey) Limiied which should accompany such application.
the nine thereof shaU-be deemed to be such value is the Dl rectum shall deem to be the
reasonable value thereof;
where toCn ^^ to e nn ^^imrra towri ^ontrwfwto aHleorp n icharerfanycnngncy .
Company at foe price pn-xbic to the Company under sod) comna and there shaD be indnded
in the liaWllric* ofthe Company the east of purchasing, as advised ra the Company forthc
Valuation Day immediately preceding the relevant Subscription Dxy, the con tract qua ad ry
of that currency ott the date to pertoraanoe of the comma;
Direaots m above u required, unless he has already received a notice pursnam to tbicpanitraph,
ehher to tana&rafl Ids sha« io ■ person who is'txx ■ uowquafifled penoa or give a request in munm
!?** afl ro 1 P 0 ™™^ roihcByttaea. Every sneh^ nqm shall be acnntpaxnd
by ibe cem&cBic or Ltui nt jiij 'w lor i hc B*mts N which ii luCn*
Indemnities a>td RespemsibiJisy
" The Byetiawi contain the ftdknring provisions:
! U) Every Director. Secretary, and other oil
Payment to pounds sterling, deuuchemarkt ar Swat franca
iibareswtU only be ccsoed by the Company agunnpoymaK in dofian. IFhere the appliearioo asenr
ro The Bank of Bermuda (Guernsey) Limned applumoa moneys may. bowser, be remitted ra
securities shall be rained at the mean between the lowest available dmliu offered price and
)hy highest availibkdadiqgbidpricedn tbeprinqpif sdbuida marka for those securities;
ill such vateatidns shill be calculated by reference to the prices appearing to the Directors
pounds surfing, dcuruheuarfc* or Swiss tones by idesrspbic transfer ra Midland
Interna t ional Division of 60 Graced! orch Street, Lon d on EC3P3BN to the account oTThc Hank
of Bermuda (Gnermcy) Limited (accooni do. 49)498, to poun&HEriing remittances, « account
no. 680)2679. for tiemsdie&cui: rermtnnces. or aaxnrar no. 68)65922 for Swiss franc renunanca)
sub-account Forexfimd Limned and by advice u thai effeaio The Bank ofBermuda (Guernsey) '
Limited til Guernsey.
The Bank of Bemmd* (Guernsey) Lunned will, as soon as practicable after eoafirmatumof receipt
ofthe ickgnphicirus&r image the necessary foreign acchiOFctoiaaaiooo comm theenmnej-
remined iaro dottanno bdalfofandforthe acxnum of the appln^ without responsbiBtyaa respea*
tbc Company and then resrir the net dollar proceeds m Quuk Manhattan Butitfor the account of
The Bank of BennedJ Limi ted as teferred to above. Whore poyineu fat doBmhao art been
received by tha Company when the sobseripdoo Uses ehwe the relawtt applkqtlbB trill
not he meevptod. No responsibility ii occemetf by the Company or fry the Bank or life Bank of
B<randa[GuenBey)Lindted toany debyiratiuriearance of fond* or feaoynecttani currency
nuuauliofl.
JfoocoorenimriiUodoDarMheapplicanonmoocyjareinsufljaeBiWpjyinftJIthestibKa’iptioo
price ofthe shares applied for, the application will be treated as in applkatioo to tuditaieriiwilw
nf shares (indoding fractimKafa dare m thcixarestanfrfamidBxhh ofi share)** may berajaeribed
with each appUamn moneys provided that such lesser number b moreihan 2 ^ 00 . If bbs lesart
amfoer is less than 2,000 the application will be rejected. ^ -
lo be ibe laresr avxilabte on such 1
Valuation Day unmedfridy pieced
or redeemed [as ihc
(a).- iftbeDiieno
: my be) provided alwayi thoti
oarkei at k he cioae oTtrosincas on Tbc -
i Day on which diarea are u be aliened
Every Director, Secretory, and other officer or servant oftbe Companv shall be
indemnified by the Company against; and "»i ihaffbc rite duty of the Director* out of
the firatfr o fthe Company ra p«y,-all costs, loaaes, and expenses wfafcfa any such officer
or semnLiltiy tncuxnr become Habit toby zeason of any com race entered into, or act
or tiling done by him as such oQicer.or servuu, or In any way qi'^u; dJscbirge ofhis .
as a Iracntire moperty oTtbeComiMmy^^^repnsri^mhmera^e^^fo^n
overall orntrdanns. - < • . "
ifrbe Dircoonto their discretion ccnaaierthas the prices tuliogcwasecuriiio market
other than rhe pnodpal securities m a rtov provide in *11 rhe rircumstaacm a fairer
enterion oTvaluc'in relation many such Investment, they may adopt sufo prices; -
rbc Dinaonrn^ibeftabwhiredbcrctum, pennit some other imtljod of^ valuation .
to be used if they consider that joefa tihuiiim better reflccti the fiat value;
<2) No piroaor f ^ecretaij or other, officer oftto Company thaU be liable for the aas K
recaspaiswgto# or deauta of anjr other Director or caEcer, or fo^iombg in any receipt
■ w Ptfag aa toconfmtaity s m to any loss or expenfc happen bg nj (be Compnny
ibro nghth einsaflSdencyar deficien cy of title til xny prtqienyacqutied by order of the
Dir««ore toor on behaliof the Company, or totiw rasufikieBcv sir ikfaacccy of any"
reeoniy » ftr upon which arreof the moneys ofthe Company shaD be invwa^ or for
if and whenever the quited, lined nr anfliblc price of ra inveamem is a smste'prioe uiqfa
pride shall be taken lithe mean between thelowea available market dealing offered price and
the higbcftanilabfemaifcet dealing Ud pricej"
prefiadnaiy exp ense s (indnt&ig the nriHiww i ncur red in eOnncetion with rhe mhialBanc' '
of (bares) wiUbcittiortiRdtfrera period offlve yean oc such aborter period a* the Dircanrs
maydaerndne from time ra time rad wffl be banded as on aamt at ctat fern aaounowrinen
oo»tondbyo^ennriifhi^^iftinmbi6tktofit,o^oveni^nnnhii"nah,or<br
any ot her ton, damage, ormbfomait whatever which ihaD happen in rcfatiopwdK
exeeaton of die duties of his office orin tetawn dwmo, ttmess the faapadi
tteongb ha own dtshoAcatjr, - ■■
(vi) ffno price quotations are svafiablcxs above,
from time to time in such manner aa tile Director* shall determine; aid ■
(vii) xny^ vitae (whether of «senniqrore*iii)(Blierwfae than in US dollars shall be conramd inn
US tWfra «t the n we t u hc tiw official or otberwHejwhiditiwDlrenonihafi in thebateohne
dberedon deem ap pro p ria te ra the e irag «3iiees hiving regard arerata rainy premium «
dfrcatmiwhirii they esnsder may be rekvaut and to emt; of exchange.
the OflicalLhiiOffty before 16th July 1982, rfac shares in the Company. Moneys paid in reaped
ofappKcarion*^ will befernrosdtwtthniu [mem)ia doBars ifsaefa Using tsaBtebamedhythet one
and in the meantime wifi be retained hy the Bank in dolkrs is a separate account. .
Bortoavtp ■
Under the SpUm ibe Directore
ebarj>e in anna, ber they are reqo
txadx the Gaetpiaft 'pawog w faorrwindto
» tenant the haCTaWffl-'of tbc Cnmpmjyand to
The ‘BTe-Uw* "provide that the Direoon nay ar any time and from time to time (depend the
derenmnatma of the net asset value lor tiw whole or any pon of any period (a) timing which ray
to itanibihfiary companies (ifany) ra a toscam^atre^rtitaiibricfiaiy conamueno fires
by ttich exercise they can secure) dm the aggregat e axncaan to the Am
undischarged of ai] moneyi borrowed by the Granp (which expression mean* indindiida
tht Cwnpaq r and to rabJKfiita for the bm^ caadtBivr; onnua-Group boirowtairshall -
not, aceptvhh (heamanofdte Company In General Meeting,' exceed anararamresial ■
to the net met ralue of all shurs in tfaeConipraiy (u-defined in ibeBye^m). - - -
•• .-T.
GorithititdX
m
. ■ i ■. .
- b..-:-
yXr- r
; *ir ' i
*: ^vr,.
fore
19SJ
’*tfe r ~
Financial Times Monday Juiw 21 1 BS 2
o«. Ij£a
UK NEWS
INSURANCE
Lloyd’s dilutes its claim
to protection from lawsuits
>Y JOHN MOORE, CITY CORRESPONDENT
• THE _ House of Lords select
committee reviewing the Lloyd's
Bin for improving the insurance
market’s self-regulation has
' -nearly finished its inquiries. The
. final dosing speech hy lettal
counsel, on behalf of those
. giving evidence is expected to
’ . be heard tomorrow. "
•. The committee, - chaired bv
- Lord Nugent of Guildford, will
thep deliberate on whether
further changes in the Lloyd’s
legislation are required.
■Already the committee has
forced- Lloyd's to modify its
immunity, clause which would
have granted a new Lloyd's
ruling council immunity from
legal, suits for damages bv anv
of Its members.
Lord Nugent told Lloyd's that
the. “ matter of immunity is
- something on which parliamen-
tarians are extremely sensitive
and the narrower you are able
■ to draw your clause the less
difficult it is for Parliament to
accept
Lloyd’s heeded the wishes of
"the - committee and the immunity
elapse allows members of
■ Lloyd's to start proceedings for
defamation and libel against the
council. The council is now
protected only from suits for
•damages in respect of negli-
gence. •
- lot acceding to the wishes of
the committee, and responding
--■to .opposition by some members
of /-the Lords -to the immunity
clause, Lloyd’s has undermined
a central prop to its argument
for immunrty:
Lloyd’s has asserted that it
needed immunity from suits for
damages because constant legal
wrangles would cause immense
damage to the market, particu-
larly if those actions became
protracted.
APPOINTMENTS
It said that it was “peculiarly
vulnerable to blackmail by
litigation" and that its position
in world markets could be put
at risk by sustained legal action.
Lloyd’s stressed that it needed
protection for a council to move
with confidence in dealing with
problems which arose iit the
market
As tiie scope of the clause
has been narrowed, many of
these arguments are now falling
away.
Lloyd’s Is still vulnerable to
protracted legal action by its
own members with all the
attendant pub! idly this ‘might
email and which it was seeking
to avoid hecause of fears that
it might jeopardise its position -
in world markets.
Defending Ihe provision of.
immunity from suits claiming
negligence. Lloyd’s argues that-
conventional protection throush
insurance would not be ade-
quate. Yet here the arguments
are vulnerable.
The present Lloyd’s com-
mittee is protected in carrying,
out its present duties by an
errors and omission insurance
policy believed to be in the
region of £lO0m. That policy is
placed both inside Lloyd’s and
outside among London Insur-
ance companies. <
Lloyd's says that a new
council would need a much
larger insurance nolicy to carry
out its duties. Extending that
new poliev could involve many
overseas insurance companies.
If a dispute arose. Lloyd’s
would have to alert its under-
writers under the terms of the
policy and confidential business
information might need to be
exchanged among Lloyd’s own
comnetrtors.
To what extent this might
become a real problem has not
been demonstrated before tbe
Lords committee. A specialist
.broker In errors and omissions
insurance has been called by
those opposing the immunity
clause, but no specialist under-
writer in that area has given
evidence on this issue before
the committee.
■' The other controversial area
of the Lloyd’s BiU. that of the
forced sale of brokers' share-
holding links with underwriting
interests, has attracted wide-
spread opposition before the
committee.
Those opposing divestment
say that Lloyd’s will be damaged
in the future. There would be
little financial incentive to bring
business to the market, which
would come to be treated like
“ any other market,” they argue.
They also say that the con-
flicts of interest could be eradi-
cated through a formal separa-
tion of management functions
within the brolring groups, stop-
ping short of outright sale. ‘
' However, three of the world’s
largest brokers have testified
that their perception of Lloyd's
as a market will not be altered
if divestment goes ahead.
In the present relationship,
where brokers own sharehold-
ings in underwriting managing
agencies, abuses can mid do
occur.
Lloyd’s is attempting to regu-
larise the relationship between
brokers and underwriters, re-
store the market's identity and
provide a sytem of fair self-
regulation within the market.
Divestment is the central
plank on which effective self-
regulation at Lloyd’s rests. If
it is withdrawn from the Bill,
there are those in Lloyd’s who
argue that the Bill should be
withdrawn rather than pursue
new legislation at any price.
Senior posts at Lloyds Bank
jjlr P. L. - Brooke . has been Lloyds Bank; Mr Norman E.
appointed' to the beard of Foster, of Barclays Bank; Mr
LLOYDS BANK INTERNA- Alan D. Orsich, of Standard
TIGNAL as an executive Chartered Bank; and Mr Alfred
LLOYDS BANK INTERNA- Alan D. Orsich, of Standard
TIGNAL as an executive Chartered Bank; and Mr Alfred
director from July 5. He will G. Pollard. -of Williams fr Glyn's
become executive .. director, Bank. Mr Peter J. MeLaren, for-
meychaot banking division, on merly an assistant- director, has
Aigust 2, taking over from Mr also been appointed a director.
ML K R. Thompson Who. returns . *
toJLJoyds .Bank as. art assistant ^ A a Raekmaster. roaiW g.
B?b4e SC ioins ST^rom Chase “ g director of Dow ^ Mining
M^an^ Bank 1 K York E « ui P ment - ^ been appointed
additionally to the board of
wuere fie was cLircctor, 'nnwrv vropA
merchant banking. .. DOwTY MECO
Mr Donald M. Corbett has Following the rationalisation
joined the partnership of and reorgani satio n moves at
GREIG, MIDDLETON, stock- WATSON & PHILIP which have
brokers, and will be responsible taken place over the last year,
for tbe new branch office In Mr H. V. Gardner has resigned
Bristol. - as managing director of the com-
•k party and 'its .subsidiaries from
Mr Michael D. Heeley has been June 1&. The chairman, Mr J. C.
appointed vice-president and Mr Hadden, will become executive
John E. Simmer assistant vice- chairman and tbe other execu- ;
president by MANUFACTURERS tive directors will, assume tbe
HANOVER TRUST CO.
- *
Mr C- J: Slrowger has been
appointed to the board of
remaining duties formerly carried
out by Mr Gardner.
nr
Mr W. A. G. Spicer will retire
NARLAND SIMON (1980) as a as finance director -of ARTHUR
non-executive director. He is GUINNESS AND SONS on July
chairman of Hornby Hobbies and 31 and Mr M. Bely Hutchinson
General Telephone Services.
* -
has resigned -as a director of
the company with effect from
^ Mr. Clive A. Panritt, a partner September 30 to become chief
“in-Touche Ross, has been elected executive of tbe BANK OF
'.chairman of the LONDON IRELAND.
SOCIETY OF CHARTERED *
ACCOUNTANTS for -1982^3. Mr Mr Keith Speed, .the former
Brian Worth has been elected Navy Minister who was dis-
vice-A airman and Mr Peter missed by Mrs Thatcher for
Wyman, treasurer. criticising defence cuts, has
* , been appointed Parliamentary
- Mr Stuart T. Graham has sue- consultant to the PRO-
ceeded -Sir John E. Read, who FESSIONAL ASSOCIATION OF
'resigned as chairman of I NTER - TEACHERS — the “we never
■NATIONAL COMMODITIES strike union” Mr Speed, Con-
CUEARTNG HOUSE upon its servative MP for Ashford,
recent change of ownership. Mr succeeds Mr John Batcher, MP
Arthur C. Richards also resigned for Coventry South West, who
'.from the board and the following has accepted a Government post
appointments have been made:
Mr Denis ML Child, of tfre
Mr Leonard Boyle has been'
'National Westminster Bank: Mr appointed chairman of GREEN-
Seth Bk CoxTof the Midland WOOD DEVELOPMENT HOLD-
£ank; Mr John A. Dairies, of INGS. .
Mr Richard H. Amis, chairman
of Alfred- Booth and Co. has
been appointed to the board of
M1CHEL1N TYRE.
*
Mr Alan Hicks has joined' the
London Office of FIDELITY
BANK a 6 vice-president and
foreign exchange manager, and |
Ms - Penny Page, who has been j
promoted to senior operations
officer, is on assignment at tbe
London office as operations
manager. Mr Hicks was pre-
viously chief trader for cor-
porate services with the Bank of
Canada in Toronto and London.
Ms Page was assistant manager
of operations at Fidelity’s New
York ‘ City-based subsidiary.
Fidelity International Bank.
★
Mr Vic Scrivener has been
appointed group engineering and
property director at ROADLINE
UK. He was- an executive
manager with ■ • the National
Freight Corp- as head of pur-
chasing. Before joining the NFC
IS months ago he was managing
director of Tate and Lyle's
Scottish operations.
* -
Mr Graham G. . Woodhead has
been .. appointed * a director of
BESTOBELL from July 1. He
joined Bestobell in 1972 as
general manager of Bestobell
Seals. In 197S be was appointed
managing director of Bestobell
Mobrey and in 1979 ' became
business group manager of the
controls and instrumentation
group of companies comprising
operating units in the. UK.
Europe and North America.
ERNST ' AND WHINNEY
have admJ tted to partnership
from July L Hr L J. Allen-—
national,- Mr R. D. Anderson —
Aberdeen, Mr A. J. Barton
— Newcastle, Mr - L Quinlan —
Manchester, Mr R. J. Todd —
Southampton, Mr' D. T. Wilson
— London. Mr E. S. Yates —
Bristol, and Mr C, Young — Glas-
gow.
FOREXFUND LIMITED continued
Midland Bank
to maintain
horse trial funds
MIDLAND BANK has agreed
with the British Horse Society
horse trials, committee to con-
tinue its financial support for
horse trials after it ceases .to
be the sport’s national sponsor
at the end of the current
season. . However, funding will
be at a more modest level.
A series of 10 one-day trials-
will precede the 19S3 Midland
Bank . Novice Horse Trials
Championship at Locko Park,
Derbyshire, next August.
Shelter urges radical housing reform
BY USA WOOD
RADICAL changes in the
1 methods of financing the
I provision of housing are pro-
! posed in a report published
today by Shelter, the national
! campaign for helping the
homeless.
The report. Housing and the
Economy: A Priority for
Reform, calls the present
system of housing finance ineffi-
cient, unfair and . damaging
to the nation's - productive
economy. Tbe rented sector,
both public and private, is being
undermined by tbe wide range
of tax exemptions available to
home owners, the report says.
These exemptions, it says,
have artificially stimulated the
demand to buy and resulted in
rapid house price inflation and
widespread under-occupation.
” Resources which are
desperately needed to renew the
country’s deteriorating housing
stock are thus being diverted
to subsidise those home-owners
who are already comparatively
weti off.”
Far from helping the first-
time home buyer, the present
distribution of subsidies made
purchasing difficult and expen-
sive while providing substantial
benefits to people who least
needed them.
Shelter callj for . policies to
reflect the need for greater tax
neutrality between investment
in housing and other forms of
investment; the encouragement
of better maintenance and rate .
of occupancy of Britain's
housing stock; and a reversal
of the trend whereby a rapidly
increasing proportion of
housing expenditure is taken by
subsidies at the expense of
investment.
These requirements could not
be met unless the main tax
exemptions which home owners
enjoyed, - including mortgage
interest, capital gains and
imputed rental value, were
examined.
In Business Class on long stretches,
which airline would you rather fly?
...
*' . I
/• v v -|
- v .V ••• • ~-
When you consider what most airlines are saying about their business classes, the differences can
be measured in centimetres. Of course, more legroom is important. But Lufthansa offers that and
even more. That’s because in Business Class on all DC 10 and B 747 flights we have removed up to
31 seats to give you more comfort, more cabin space and far longer stretches. There’s a choice of
menus and a complimentary bar service. And if our selection of six different beers, six whiskies
and seven wines rs not your cup of tea, there’s a wide range of soft drinks to be sipped at, not to
. mention our vintage port wine. There’s also a big choice of reading material and free in-flight enter-
tainment. Only Lufthansa can give you so much.
Lufthansa
German Airlines
Contact your Travel Agent or Lufthansa Reservations.
TtafoSwing coo tracts have been entered into prior to ihcdaicof this decuman and arc,
: a) ^Manage oient .\gtttmeat dated 1 6th June 1 V92 between (I) the Company and ( J) ihe
' ' Manager whertbv the Company appointed the Manager, aubjeato the overaU
superb oflhe Dircctom, to manage the Gompanyj i
rJwen of delegation, and to distribute and promote the datribouooof shares The
■ ■ - .Agreement contains provisions indemnifying and the Manager toot
-- - Imbiliw not due to us vnlfiil m i n ca wn cc, negbgeoce, tad ruth or reckles s dmejard
of duties. For the purpose* of carrying out its duties under tbe Agreement, emuun of
rbe functions duties powws daoeuoos of the Demon are ocrosaMe by the
.Manager. In tbe event of tbe termination of tbe Management Agreem ent, th ese
. tunaioas duties pows«^d»crainMna>uldra\-en»iheiXrectw. Tbe A ^ eemcu
sftrV&CTiod of three eeamand will continue t hereafter unfesa «•«*» teroumted
► by si* months' notice in writing being given by either perrv to the other.
; 7 r.,, Investment Advisory Agreement dated 1 6«h June 1982 between (1 ) the Company (2)
1 , h , Manam and til D tenon Montagu whereby UrsytMt -Mcmiaguagreed to jut f
• SUZ li the Maosger with rmpee. to the C^p^r The ^^ncmt
,-ooreios provisions whereby tbe Manager and the
nemot Drayton Montagu from liability not due to us wtllisl mwfeasiBCe. negligence.
* - WfMh or Jcekien Jarogaid of duties. Tbe Agreement is for a pertod ot ‘breeyears
• ' riven by either parre to the other.
I « .
^^OTths’ notice in wnung by either pan>- to the other.
• ' -‘ Rebrand Transfer Agent.
^ ofBerai^r {Guernsey) Limbed wna appmmed a sufampuon and
*■ • • r »r|»rop rinrt'agenr of the Company.
•- -• Yo*n<gR>t k ’ t ... . ^iaii-muasiovoriueuiionwUcbBsysbaresmaybe
**^s3£iSSlEZ£2lX3^
MUcettnniir
The CauTpany to nor esaUitbed a place of business in Great Britain and does mx have any
subsidiaries.
This document shall hareibe ellcn of rendering all persons concerned bound by all the provriions
(other than the penal provisional cfSeaioiis iOand SI of the Companies Act. IMS ofGieaiBnum.
No litigation or claims of material importance arc pending or tbrntened igaiiui the Company.
The mnunmm amount which in the opinion of ihe Directors must be raised by the issue of shares
in order to pronde for tbe maters referred to m paragraph 4 at* the Fourth Schedule to the Companies
Act, 1W1 a S%DCO.DOO raadt up as follows: . ..
(i) . Purchase price of prtpenyv nil. V »
(u) Preliminary expenses and cpromiwms, 5151,001?. : . ’ .-
ttiii Xcpsytjitm oTyrumeyi. borrowed in respect ofanj'oflheabOve/tuL "
(ivj Working capital, S2^45»,000. ;
As mentioned above, acommisshm of 60 cents per share su bs cribed is payable to the Manager. Tbe
amount at <h} above includes such cnitimiiwion on 300,000 shares.
Pcat.-Marwidt, Mitchell & Go hatipgiveh and have not withdrawn their uritten consent to the issue
nf this uoctinieni with the indcsioa of a copy of then* report m the form and context in which it ii
included. .
There weremacbodmrhedBpyBfilBsPro sp ectnt driiveredmihc ftegarrarofCompaoita in Engfaad
copies aj’the amtncu referred Vo above under 'Contracts' and the consent otTeai, Manrick, Mitchell
& Co referred to above.
Jmtfiaimtf menu •
Cones oi ibc fnilowing dooimems mSl be available ter inspection tf iberlBaaoTSlau^ner and Mar, -
35 Baam shall Srreei. London EC2V SOB on any weekday (Saturdays excepted) during normal .
busiucm hours mull 9th July 1982: ..
(i) the Aaoftbe Bermuda Legislaiure under which tbe Company Ms Incorporated;
(ii) the By-laws of tbe.Company;
(iii) t he comrans, referred ro under ‘Coniran s' above; and
(«v) the report »de^r'onto,M^ . Dared I7tb June 1982
Copies of this docomeorwiilx application form may be obtained from;
The Bank of Bensudx Limited, SamncJ Montagu & Co. Linuied,
Bank ofBennudaBtiildiiig, 114 Old Broad Street,
Front.Srreei, London EC2.
Hamikon 5-31, Bermuda. HoareGoratlimited, ...
The Bank ofBencuda (Gticmscri Lnniied, Heron Hcm^c,
Bermuda House, 319J325 High Holborn,
Sl Julian’s Avenue, London WCI
Sl Peter Pon, «d
Guernsey, - - • 27 Tfan^monoo StipH,
Channel Islands, . - London EG2.
APPLICATION FORM
Ten The Bank of Bermuda Limited.
Corporate T rust Department, Bank of Bermuda Building, Hamilton, Bermuda,
or The Bank of Bermuda [Guernsey] Limited
Bermuda House, St. Julian's Avenue, St. Peter Pon, Guernsey, Channel Islands,
acting on behalf of:
The Direct on nf Furexftmd Limited
1 - Wtfe hereby acknowledge that I/VTe have received and considered the prospectus dated
1 7th June 1982 relating to Forexfund Limited and that this application is made on i be
terms thereof and subject to tbe provisions of tbe Bye-laws of Forenund Limited.
2 I /We hereby apply for ! shares of Forex fund Limned.
I-Voir the hvtdufs for ead\ sfrplkani ir 2,000 iham.)
3"(i) IATe confirm that payment of VSi has been made br
telegraphic rransJ rr to Chase Manhattan Bankof 1 Chase Manhattan Plaza. New York,
NY 100 1 5 for tbe account of Tbe Bank of Bermuda Limited, (Chips LTD No.005584
and account No. 001 -1-067 ?lh) sub-account Forestfund Limited.
or
•(it). JTTe enclose a cheque in favour of The Bank of Bermuda (Guernsey) I. imbed for
USS and undertake to the Company that such cheque will be paid
on first presesiauoo.
■ Of
'(in) ITJTe confirm that payment nf *£/*DM/*Sw Fr ! has been made
by telegraphic transfer to Midland Bank pic, Imenunonal Division of 60 Gracechurch
Street, London EC3P 3BS lot the account of The Bank of Bermuda (Guernsey)
Limited [-account no. 491498 (lor partnems in pounds sterling). ' acrouni nn.
bS0I2670(for ptyments in deuuchcmarks), -account no. 68165V22(for payments m
Swiss Francs)) sub-occounr Forexfund Limited and
WSe authorise The Bank of Bermuda (Guernsey) Limited as my/our agem and fnr
my teur account to purchase with such moneys US do] bn as soon as practicable after
confirmation of receipt ofihe telegraphic transfer and to pay such US dollars in Chase
Manhattan Bank for (be account of Tbe Bank of Bermuda Limited aforesaid.
(■Vote.- -Ortfre Kktckever u am Jppropnatt.) ....
4 (i) 1 confirm thn;
-(a) 1 ant not a United Stares person (as defined above).
*(b) lam a United States person but am applying as aaourineeida person who
unocaUniied States person and wboiimx acting directly « indirectly
for or on behalf of a United Slates person.
f None *in the ease of a sntgjcapphcatt, ddae eutur (ajorfb) end (ii) bdos)
(ii) WcaHilimithat:
*(aa) None of ui b a United States person. ...
*(bM One or more of us is/are United States personfs) bur we arc applying as
nominees of a person who is not a l 1 cited Stie* person and who bnor
acting directly or indirectly for « Oft behalf of a United States person.
£V«c ’imixeese offwn apptkoats, deieu taker (oa)i>r(iA)a»J(i} abntl
C&npteic in blink Liters please
Surname .
Forenames (in full)
“I
Signature Date
or
In the out I'fjciniapplnaiiim. 1 , oil remaining joint epplujnu should sign iKdrziluolh- and&mpleie
Mil,
Forenames (in full).
Signature .
Forenames (in full) .
Signature .
Forenames (in full) .
Signature .
X.H. (A)
Arrangements ean be made with the Bank for shares to be held in the name of
a nominee ot the Bank or underarnisr in Bermuda.
Please tick here ifyou require further details. □
A confirmation note will be sent upon acceptance of this application.
Share certificates will be mailed atthc risk of the personfs) enr jrled thereto and,
if there h more than one applicant, will be mailed to the address shown above
of the firy -named applicant.
lfon conversion into dollars the application moneys arc insufficient to pay in
full the subscription price of the sham applied for, this application shall be
treated as on application for such lesser number of shares (including fractious
ol a share to the nearest one hundredth ofn share) as may be subscribed wuh sudi
appbamoc moneys provided that such laser number is more than 2JYM. Ifsurh
L . acnns airccny or toror oo ot a Umlcd 5[ales apphanioc moneys prmided th,t such l«cr number is more rtan ^OOO.If ^ M
(S’oiC ’an keceu of jam applicants, delete either {ea)eT(bh)a»J(i} abeteX laacr number n less ttanJ^OO the application will be rejected. B
8
i -Financial>Tlines^ j
THE WEEK IN THE COURTS
Lord Denning and his pet aversion
T. S. ELIOT's aphorism that the
end of the world "came nor
with a bang, but a whimper”
will certainly not be applicable
to the end of Lord Denning's
amazing judicial career. The
Master of the Roils, who stands
down in live weeks after 3S
years of judicial office, gave a
thunderous judgment on Friday,
excoriating the trade union
movement for treating a worker
*• as a pawn on the chessboard "
of inter-union disputes. * Lord
Denning was deploying all his
judicial and literary talents
against his pet aversion.
Mr Ernest Cheall was a
member of the Association of
Clerical Technical and Super-
visory Staffs fACTSS). a sub-
sidiary ol the Transport and
General Workers Union
(TGWU). Dissatisfied with the
conduct of the union’s affairs,
Mr Cheall resigned and joined
a rival union, the Association
of Professional and Executive
Clerical and Computer Staff
(Apex). ACTSS complained to
the Trades Union Congress that
Apex was in breach of the
Bridlington agreement of 1939
providing for the resolution of
disputes between unions over
membership. The disputes com-
mittee of the TUC adjudicated
that Apex was " poaching,'’ and
ordered that Mr Cheall’s
membership of Apex should- be
terminated in accordance with a
iule of the union. Mr Cheall
did not lose his job after he had
been ejected from Apex (which
he had represented in the
union's dealings with the
employer. Vauxhail Motors)
because there was no closed
shop at Vauxhail, but he sued
Apex for a declaration that he
had been wrongly expelled by
the union.
Lord Denning saw the issiy> in-
black and white terms. ■ The
individual worker had the
freedom to join a -trade -union
of his choice: he wd& not to be
ordered to join- any trade union
without having a say in the
matter. Whatever might be the
consequences — in this case the
possibility of industrial chaos-
principle had to prevail over
industrial convenience. But a
worker's freedom to join a union
and remain with the union of
his choice confronts headlong
the freedom of the trade union
movement to organise itself
effectively.
Mr Cheall is certainly not the
first person to feel aggrieved at
the •‘anti-poaching 4 ’ rules which-
prevented him from remaining a
member of the union of his
choice. As Lord Justice
Donaldson observed in his tell-
ing dissent from Lord Denning,
there is an inherent and in-
evitable conflict between the
needs of trade unions to avert
industrial strife and tbe wish of
individual workers: "The con-
flict is only one of the many
intractable problems in
industrial relations, and it is
not one which judges can
resolve." Lord Justice Donald-
son could find no trace of un-
fairness towards Mr Cheall in
the way that the trade union
movement had dealt with his
case. ■
Throughout the years the
disputes committee of the TUC
has made awards between con-
testing unions. Tbe difficulty
has occasionally cropped up that
its awards have no legal force;
the only sanction is disaffiliation
from the TUC. or suspension of
the errant union. The law in the
past obstructed implementation
of an award where union rules
did not contain a power to ex-
pel a member following the
TUC finding of union “poach-
ing." In 1956 the TUC recom-
mended to affiliated unions that
they should adopt express
exp ulsio n rules in order to
allow them to expel members on
direction of tbe disputes com-
mittee. Rule 14 of Apex’s rules
provided that 41 notwithstanding
anything in these rules the
executive council may, by giving
six weeks’ notice in writing,
terminate the membership of
any member, if necessary, in
order to comply with a decision
of the disputes committee of the
TUC.” Lord Denning thought
the rule did not comply with the
fundamental principles of free-
dom of association and fairness
towards members.
In the past the disputes com-
mittee's awards have sometimes
appeared * rather rigid and
bureaucratic, in that they
ignored the rights of the mem-
bers involved in the disputes.
Since the awards of the disputes
committee are not legally Bind-
ing on the individual worker-
members. and are generally
implemented by a provision
such as Rule 14. there is much
to be said for the disputes com-
mittee giving the worker the
opportunity of stating his rea-
sons for continued membership
of his choice.
Lord Denning sought support
for ins sweeping condemnation
of trade undon interference with
the worker’s freedom to join a
union of his choice from
Article 11 of the European Con-
vention on Human Rights. He
said courts in the United King-
dom should themselves give
effect to the Convention rather
than force the citizen to go to
the European Commission in
Strasbourg, with the potential
indignity of that international
body- declaring the UK Govern-
ment in breath of the Conven-
tion. He assumed that Mr
Cheall’s case presented a clear
violation of the freedom of'
association in the form of the
closed shop. But in this instance
it is anything but dear, whether
Apex’s action would be re-
garded as a breach.
When tim European Court of
Human .Rights,, exactly a year
ago. ruled on the case of three
British Rail workers fwho were
di smi ssed ' from their employ-
ment because they refused to
join a -imam' in a dosed shop
within British Rail, it did not
outlaw every aspect of the dosed
shop- 2 The court Said that dt was
not reviewing tiie closed shop
as surfi in relation, to the Con-
vention nor was it expressing
41 an opinion on" every conse-
quence or form of compulsion
which it may engender.” .It
limited itself -to the effect of
tbe system on those three appli-
cants. It went on to say that
“compulsion to join a particular
trade union may not always be
contrary to the Convention.”
•It was only, because a threat
of dismissal involving loss of
livelihood - was such a serious
form .of compulsion that. thg.
three British Rail workers were
successful. Even if Hr Cheall
had suffered any loss of. liveli-
hood (which be did not) 4t &
not at all certain whether the
European Commission -tmtiaOly,
or the European Court ulti-
mately, would uphold his cWem.
It is conceivable that it would
say that the restriction Rule 14,
was justified as necessary in -a
democratic society, and ' so
would escape the broach of the
freedom of association. It might
well conclude'; that tbe. courts
should affirm and', not obstiubt
the awards of ..the TUC disputes
committee. ; /
1 Cliea.ll v Aperi’fhhes Law Re-
port June Jfr 1982.
2 Young ./Jerries and Webster v
United ■ 'Kingdom-; [1982] .4.
E.HffL2L3&'
* - • Justinian
p
BBC 1
TELEVISION
LONDON
RACING
BY DOMINIC WIGAN
AFTER the glitter and
pagaentry of Royal Ascot, where
a high proportion of the
£500,000 prize money was dis-
tributed among such relatively
new but staunch supporters of
British racing as Sheikh Fahad
Maktoum al-Maktoum and his
hrother. Hamden al-Maktoum, it
is not surprising to find a some-
what drab look about today's
events.
But whatever it lacks in
quality is undoubtedly made up
for in quantity as regards the
inveterate backer chasing
Ascot losses. Following after-
noon programmes at Brighton
racing at Wolverhampton,
where the card is due to close
some 74 < hours after ' the
“ opener” bn the Sussex course.
Lester Piggott, for whom
Ascot was another memorable
milestone in bis career — high-
lighted by a probably never-to-
be-beaten 11th Gold Cup
victory — rarely visits Pontefract
these days and it is interesting
to find him at the South York-
shire track. The main purpose
of his visit appears to be the
nossibility of winning rides on
Bracadale and Wintergrace.
Bracadale, a tough, son of
The Brianstan. has maintained
respectable form since winning
a Crown Plus Two Apprentice
race at Goodwood last month
without managing to defy big
weights. -It was his inability to
below hjm in. the. handicap^
which brought about his down-
fall at Leicester nine days ago.
Bracadale will clearly have
his work cut out to give
upwards of 15 lbs away all
round in the Martin Group
Trophy, and I prefer to rely
on the unpredictable but
talented Och Aye. At 33 lbs
below PIggott’s mount in the
-weights. Och Aye represents
James Bethell in preference to
the four times recent winner,
Lord Wimpy.
Wintergrace, the almost
assured favourite for the Ponte-
fract R^aiden mile, has not been
seen in public since finishing a
close fifth of 21 behind Moniar
in a maiden event at Newmarket
in the first half of last month.
But she is : said to have been
encouraging :. effort, and . her
market -position- is likely -to -:be'
justified. i • ' . ./'
A , chestnut' \ daughter, . -of-
Northern . Dancer, fWintergraoe
again finds herself, in a 21 -
runner field for which dangers
in the shape of Wynnwith Boy
and Taking Silk could 'emerge."
BRIGHTON
2.00 — Zbnan
2.00— Black Mike
4.30 — My MaraviUa - .
PONTEFRACT ..
2.45— Gentle Music
3.45— Och Aye***
4.15 — W Integrate
4.45 — Commonly** •
WOLVERHAMPTON"
6.45— Bell Island
7.10 — Arcbon ► .“
7.35-^-Charhoiniel *
•* • 6.40-7.55 am Open University
(Ultra High Frequency only).
iW.You and Me. 10.1HL20
For Schools, Colleges. 1.00 pm
News After Noon. 1.30 Pigeon
street. L55 Wimbledon 'Laswn
Tennis 'i Championships. 4.18
Regional News for England ,<ex-
olndfpg- London).. 4JQ Play
School. 445 The Space Sentinels.
5.05 NeyrarOund: '5.10‘ Blue Peter.
5.40 News. - :
6.00 Regional News • Maga-
• - ones.- • ■ ’ ’ ' .
6.22lNstionwide. •
• ' 645- Worid Cup Report: High-
;■ : lights of the matches be-
.., tween Kuwait and
■■.France, and Algeria and
Austria.
. ?J5Trianglew
‘ 7.40 Comedy ' Classic: What-
■j ■ ever Happened to the
- ... likely Lads :
8J0 Panorama. T . _
9.25 Ptey of the Month: On
Approval by Frederick
Lonsdale, starring
Penelope Keith and
• - Jeremy Brett.
1058 News Headlines.
1 LOO World Cup Report: High-
lights from tonishrs
- match -between Northern
Ireland and Honduras,
plus action from France
v Kuwait and Algeria v
Austria.
tonight’s Choice
" At last it’s summer and the schedules shine .with repeats.
Whatever Happened .To The Likely . Lads? wits one of the best ,
c r rfne dy series ever, as. good as. the o ri g inal likely Laos^* and with , •.
acidulous Terty (James Bolam), devious Bob {Rodney\BeWes)-;
and prim Thelma (BrigitForsyth); Dick -Glement’s.gmi ^TanLu
Frenais scripts' got- the acting excellence they iSteserveLr^iMi
week (BBtM. 7.40V Bob gets breathalysed. /
Of course if you are a Honduran you wiU wapl to^wattar..
your chicos play Northern Iceland (ITV 7.30). .
has an interesting programme at the same time as^fhe.qther tiro
channels, Kenneth Hudson visiting the museums at- Grasmere -
and Scunthorpe which are among the six finalists itt^Ms^year’S- -
Museum Of The Year award. ■' ’ :
The other big repeal., of the day is '.Freder^^Iionsdale’s „
comedy On Approval, in .which, two aristocratic couplea antkipatei-
marriage (we&i the daytime, side of it this is, the 2 820’s}- -to test
comparability. Penelope Keith; as usna]/inakes/^
dialogue. (BBC-1. $-25)- . "
PS: Wimbledon starts at L55. (BBC-1 ) and. goes om and on.,
and on. . ... By li.00 at night , you might evenybe ready for-
highlights of Algeria v Austria (BBG-1).: - /< •:" /v ; = 1 ’/v-
BBC
6.40-7.55 am Open University.
10.30 Play School. -
2.01 pm For Schools, Colleges.
2.20 Wimbledon 82.
7.40 News Summary.
7.45 Museum, of .the Year.
8.16 Tony 'Sings and- Buddy .
; Swings..' "■■■;
9.00 The JUtcMuker's -Guide i
td the Galaxy. - " ' “ !
9.35 Human Brain: ..
10^5: Wimbledon 82.-.:T ■. . i--:;
1L00-11.50 Newsh^WL^..!.
9^0 am^Sdhoois Programmes.
12-Ad Ccddesfeea Bay. 12,10 pm
E’ainbow. 12.30 ‘ SdpCrsavers. LOO
News,', phis:' JET • index. L20
: ironies News, with -Robin. Hous-
:'X30^an.Ber Valk. - 2J0 ■
Monday Matinee: “Trader Horn" r
starring: Rod Taylor;- Anne Hey- .
Twood and Jean Sorel;4.15 Porky
'Pig. 430 The SOCrtr^Show. 4AS
Sinitlk" and .GoodjV SlS^ Gambit
. '.vs^ -NesgB-T'r : -.- r '3
i&OO T^mnes-v^ \vNews . : with
-Ahdrfew -- '^Gardner and
. ./ Rita Carter. * ..
.*T C25^H«5pr yiv Taylor
.- .vGee.
^ ;.6JK.CiPSS«»ds.:-.-..i
•;l 7IW "Cortjnatio^'- Sireet.:. .
. ■_ 7.30 Wo^’d *82: . Northern
.- V ’■ Ireland ly Hondoms; from .
Romaicda Stadium,
. _ ; Zaragoza , i introd u ced by 4 '
V -Brian. Mobre.- Also- high- ;
• *?■ lights : 0 £;> the. Fiance v
* . Kuwait V ^ "the .com-
. . mehtatdr .^.ls- / Gerald .
: / . Sinstjuit./-- •”
10.15-NeMfB..'.
ILOoWorld/m Action.^
nM Thaliler Anktoiny o l
•L'-'.Tacror; w : ‘
12JSP v am .dose: /Sit Up . and
d-j,.£^n.;^ii^;i^.Beloff.
f
^ Indicates programme
- In biadt and white
All IBA Regions as London
except at the following -times:
ANGLIA
1 pm Anglia News. 2-30 Monday
Film Matinaa: "Trottto True." atamng
Jean Kani and Janwa Do«a<d. 6.00
A bo in Anglia. 12.SS ana Four Into One.
Crossroads. 6.00 Cha final Report- 6 JO.
Happy. Days. . 1CL58 Channel Late News. ‘
liao Aujourd ‘Hui an Fdmca. 11^
Thriller. "Come Out, Coma Out
Wherever You Are?” VLSB am News
end Weather in French.
tf.75-S.3Si, Report ; Wales. r -17*. 00 Yr
Wyshnoff. 11.30 < Video Sounds. . 12.00-
TZJO am Worid- |n Acton. J As MTV
West at. 11 J00>.>-. ; : V
12JS0T am tbODpeny,/ V-
SCOTTISH
graivipian
BORDER
^20 pm Border News. 2JO Film:
" Hunters . ol the Real." starring
Michael Perk. 6-00 Lookerouffd Mon-
day. 630 Fashion Today. 11 -30 The
Monte Carlo Show with Dabby Boone.
12^5 am Border News Summary.
9-25 am FHw Thing. .1.2D pro North
News. 8,00 . North Tomgjrt. 11.30
Country Focus. .12.00 Top . Rank Fights
ol the 70s. 12£5 am* North Headlines.
GRANADA
1 30 pm ScrSttfsh NeWa. 2.30 Monday '
Matinees -.‘- Forbidden rXnowladoe.' -
sMmng.Acrtbonr ;Qirfnn. -" Angie OtCkin-
son. end..* Broderick- CrawfoTd. 1 , 5:15
Traveller's. Talas'. . . 5-20 Crossroads.
6.00 Scutiaind . Today- ’ end Crimed ask.,
1130 Lto 'CiH. lUS.iNero .WoBe, - :
JTWE/TEES:
CENTRAL
1.20 pm Central News. 2-00 The
Monday Screen Matinea: " Bachelor
of Hearts." starring Hardy Kruger and
Sylvia Syms. 6.00 Crosaroeda. 635
Xanrul Newi. 1130 Central New*.
11I.38' Barney MiHer. 12.06 am Come
Close.
130 pm Granada Reports. 1-30 Our
Natural Environment. ' 1.45 -Monday
Matinee: "The Sundowners." Starring-.
Deborah Kerr and Robert Mitchum. 6-00
This Is Your Right. 6.05 Crossroads.
630 Grenada Reports. 11.30 Danger
UXB.
TSW
130 pm TSW NeWs HeardEmasi 5.15
A20.anx.T15s Good Word. "'935 North
Ewt-^Nawsv- T30 pm-- North East- News
-and l4>dkarDun(f. 239 Monday Mdtmae:
V.BIMia Spirit^* Starring Rax Harrison
*nd -.Margaret. RuttMufopi. . 5.00 North
E>*t roM«L : &OZ Crossroads. ' 635
-Noftbenf^Lif* Vvidi-Tom Coyhe:- 1130
{est'.Nevwv TI30 Htn -Sareat
BNsjl.-. • 1235 .am Jetem. ...•••
1151"
I'K
Gua HonsyBtm-'s NOgic SdrtMaks. 530
Crosaroeda. 6X
HTV
6-00" Today South -West.
6.30 Happy DayelVlT-Oa .TSW UW"
News. : njJ.Poateoript- n.38'Thnl»ert
" Come Out,, Come. Out, Wherever You.
Are." 12-56 awn 5oudi_We*r Westtuv
arid Shipping -''ForecBet, - ■ - ■ •. Y'-
ULSTER
CHANNEL
' 1.20 pm Channel Lunchtime Naum.
What's On Where and Weather. 530
130 pm HTV News: 230 Monday
Matinee: " Gaordie.” starring Alasiair
Skn and Bril Travers. - 6:00 HTV News.
1038 HTV News. 1130 Mannbt.
HTV Cymru /Wales — As HTV Wear
except: 12.00-12.10 pm Dacw JiAatn Yn
Dwad. 4.45-5.15 S«r'. 630 Y Dydd.
TVS
,Vr430- pm^luDchtmre..- 230 .Monday
-Mstlit«av-* r Forbidden 'Knowledge;'’ 4.13
Utoer Nows. ! 535 .-Film - Fuh widi
-.Dsrelf-^GdfBdiS.:; 830'- -Good '€venmg
i-TJlafc»r, : .1039 : LKstac . WaatharV- -'11 -30
-Church' Report. 11.5a News at Bedtime.
1.20 pm TVS Newa. ^30 -V- ForWdderi
Knmvtedoa - - fTY movie); idMrr’mg.
Anthony: Quinn, 'Angla- DhAiiMOri , and
Broderick Crawford. . 536 Wszdi ' This
Space . > . That Mthidey Evarrinff.
YORKSHIRE
- ‘130 pm ' Calendar. NeW&“f23ff’ Mon-.
- dByrrfttarinee:--:" Cardboard. Cavelier."
‘Bbo Calendar (Emisy Moor and Bel-
:'mont«did6ns].' 1T30. Lou. Grant,
•. .v .
(S) Stereo broadcast
^wtian broadcast on VHF)
RADIO
RADIO 1
'630 am As Radio 2- 730 Mike Read.
930 Simon Bates. 1130 Dave Lee
Travis. ZOO pm Steve Wright. 430
Richard Sktnner. 7.00 Stevm' Alive
wMi Andy Peeblea. 8.00 David Jensen.
1030-1200 Mark EHan <(S).
. VHF Radios 1 and 2—6.00 am With
Radio 2. ZOO pm Don Durbridge (S).
4.00 Col>n Berry (S). 5.45 News. Sport.
6.00 John Dunn (S). 8.00 Folk on 2
(S). 9.00 Humphrey Lyttelton with the
Best of Jau (S). 10.00 With Radio 1.
12.00-5.00 am Widi Radio Z
Cup Special: Honduras v Northern _ . .
Ireland from La Rornarede Stadium. for Pleeaora (S>:
Zarago za - 10.00 Funny You Should
Ask. 1030 Star Sound with Nick
Jackson. 11.00 Brian. Matthew wttb
Round Midnight (stereo' . from mfd-
mght). _1JX) em Encore (S). 230-
5.00 You end the Night and the Music
(S). '■ •'
■’r.i.'.Vr- ,
- Soun d-Arofrivas. 837 Woodier.
' .’travel. "9.00 News. 935 Start .Hue. Week i
-wUh-Ri^iard Beksr <S). 10.00 New*.
.10.02 Money Box. 10-30 TtoKjr. Service.
KF New
Records 16). .4-55 Hews. B.OO Msihly ' P-4S |^c»ning Story.' 1ZOO (Kwa^.1133
635
Organ’ (S). ZOO Iridependanc a P o ept.
Dow 'Your Way viste Banqroipla.
North-.qjevca. - 1138 Pd4oyV«eaa«l 1
1ZD0 Havre, TZOZ pm YOu'arttf Youn.
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RADIO 2
5.00 am Ray Moore (S). 730 Tarry
Wogan-(S). 10.00 Jimmy Young (S).
1230 Gloria Hunmlord. (S). ZOO
Wimbledon 82. 7.00 John Dunn fS)
(conrm’ued’ Irom VHF]- 7.45 World
.RADIO 3 -
6.55 am Weather. 7.00 News. 7.05 -
Mommg Concert [S). 830 News. 835
Morning Concert (contiuuad), 9.00
News. 9.05 This Week's Composer:
Puree (? (S). 10.00 BBC Concert-
Orchestra at Bedford '‘(S)--- 1135 LeuJu-
Mrahst Mela Voice, Cfenri (S). 1230 -pm .
StamcrtuL ■ Mikotej .Gome* Ziefonski
(Sj: 835 A -Country Tepeahy. , 045
A Polish Concert. 'part~Z Pnndareckl,
Sxarayiwfci.'- Zielenxki (S) . 9-40 Araby
(short story by Jooiee Joy ce]^. " 9.55
The Infiuance ..of Fantasy (8). 10,36
Sis Frdm South - Kensington by Cohn
McLaren. -10.45 Jan .in Britain '(S).-
11.15-11,18 /tews. .
Stripping. Forecast- ZJXH-Neyn^" 202
Women's HOUr. X0D-Nfii*ra‘. 3JDJ2 Ahar-
rioon 'Theene- (S).. 430 .Letter from
Belfast -bp Sara McAogMry, 440 Story
.Time... 5JW-PM:. News. Mapflilna. 5.50
ShfoflkiB-'FoiBCflirt- ■ 535 Wmriiaii’;pro-
gremntu- news. - '6.0a News, including
.Finenciel Report. : 5.30 The.-Nfiin Quiz
'. IS}. .. .7.00 Nona. 7.05 The.-ATOhera.
-' DArun’ ir '730.. Start, 'dir - . Week- ' Vrith iRichacd
nHUlU f* . v ... • Baker (S).' *830 The Monday .Play (S).
6.00 am News Briefing. -,6,10'Jerm-j 9.15 Part one Grate. -ZSO'Kefeiddscope.
CeWo and Piano rectal (S). 1.00 News. ’ »ng Week. 635 . Shipping Forecast. 959- ..Woatter. : 10.00, -.'The - 1 'World
1.06 BBC Lunchtime Concert (SI. Z05 630 Today. 8.35 the Week on 4. Tonight. -1130 Today rn Parliament.
Matinee Musicals (S). 3.00 - New 8.43 Gtyn Worsnip wnb recordings from TZflO News. - ! ' •
OVER:
-s LM
i- - "I
1
N
Memo from
THE BANKER
X 0 The Bank Secretary
From Th e Banker
Subject Balance Sheet/Report and Accounts
The Banker has introduced a forwarding service for readers
requesting copies of the full accounts of banks which have
advertised a summary of their balance sheet in The Banker.
In addition your advertisement is indexed in each issue for 12
months thus extending its effective working life throughout the year.
Promoting this most important annual document of your
activities to potential correspondents and banking counter-parties
around the world is an essential— and economical — part of
your business development and bank calling programme. .
Analysis of the 500 reader requests serviced so far '(in just one
month) show that -60 - per Gent have come - from Head. Offices^
or regional head offices^ of banking institutions in the UK,
Middle East, Europe, USA, Far East, and Latin America. ‘
25 per .cent , have .come from corporations and It) per cent from
investment advisers.
If you would like to- know more about taking advantage of
this important marketing opportunity please contact :
The Marketing Director
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Minster House Arthur Street
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Telex : 8814734
A FINANCIAL TIMES CONFERENCE
ISIX
Hotel Inter.Contlnental, London,
July 12 & 13, 1982
_vVi
* V.
This two-day conference, which follows the publication of
the Cork Report, will examine the current state of the Law
and its practical applications and will pose the question ‘Is
there a better way?’. A feature of the programme will be a
comparison with American Law and Practice. ■
Speakers will include: : ^ : V * "
1 In
i: c
Lord Benson
Adviser to the Governor
Bank of England
Sir Kenneth Cork, gbe
Senior Partner
Cork Gully & Co
Mr S A W Carslake
Assistant General Manager
Barctays Bank pic.
Mr FG Fisher, Jr
Senior Partner &. Head of
Commercial Practice
Hale & Dorr, Boston
Mr Muir Hunter, oc
Member of the Insolvency Law
Review Committee
"M5
MrWGMackay
Partner
Ernst & Whfnney^
TTie Hwi Thomas W Lawfess
Chief Bankruptcydudge ' ' ;
Bankruptcy Court, Boston :
MrLRPincott,CBE V
Former Chief Executive
Stone Platt Industries Ltd
Business
Reorganisation
-A BALANCING
OF INTERESTS
ten FfnancU^ 71na6sUin»6& Canfanac* dganiMlion l »iMHaint,
Artto 1 Street’ London EC4R SAX • . .
T*b01-SZ11355T6il)C 27347 FTCONFS Cafatoc RNCONF LOBIDON
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^ ®n-
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Pteass sand imfirtnr details of
pusmess reorganbation cohfkence
Name
% V f;
Ife
Company:
■Si
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Address
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CONFERENCE
Tel:-
Telex:
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financial Times Monday June 21 19S2
UK NEWS - LABOUR
Scargill rejects plans for
pension fund investment
-v r'>4 1
■ : i ' , ii i *
■7c r' #&•
BY PHlUP BASSEtT * LABOUR CORRESPONDENT
-FUTURE PLANS hy ' the
, i ; miners’ pension fund for over-
*&s investment have been
.-.thrown into disarray by rejec-
r : 05 P™P°sa)s by Mr
- P^dent of
* the National Union of Mine-
WDfxers.
-
£ tees
>3v.
. • -ti V
« 'll.]**
- It
■ .l 1 *"? £
-STER •
. '■ . :al I*.
v;i*v
s ?i • :
.
’ : 5 *
* ‘ St^- •
^SHIRE
firm response to
* . the fund s proposals, coupled
Vv^th a week-end speech warning
-■ ®»- - new . Pit closures, clearly
- i difficulties facing
:Mr Norman Siddall. new cfiair-
man of the National Coal Board
whose appointment is expected
to be announced formally either
. today or tomorrow.
Both the NTJM and the NCB
•.._h?yc- representatives who form
the joint trustees erf the £1.4bn
miners' pension fund, to which
all the 250,000 miners make
,,...; payments.
■ -.7 At .« recent meeting to discuss
... future investment strategy the
v fun d's Investment advisers put
proposals to increase the level
of overseas investment from
the present proportion of about
15 per cent of the fund's assets.
Among projected investments
are deposits in South Africa and
the U.S., where ihe fund already
owns, for example, the "Water-
gate building in Washington
which was at the centre of the .
1970s U.S. presilential scandal.
Mr Scargill refused at the
meeting to endorse the budget
and expenditure programme,
and the meeting was adjourned. 1
NCB officials will try for a
resumed meeting.
.Mr Scargill -said yesterday:
Tne union trustees have re-
fused to authorise the plan
because of its overseas invest- ■
ment. I am told hte move is.
illegal, but we do not accepr
that. We believe our position is
perfectly clear- and justified.” .
He said he would continue to
block the scheme until the pro-
posals for- overseas investment
were dropped.
The money should be invested -
m Britain, to create more jobs,
. though the NCB insisted that 85
per cent of the fund’s invest-
, merits, a higher proportion than
most others, were already
invested aft home.
Disclosure of Mr Scargill’s
blocking of the plans follows a
weekend speech by him at the
Yorks hire Miners' Gala at Don
caster, where he warned miners
to -be prepared for posable
strike action over proposed pit
closures.
At ’least six, and probably
more, of the closures proposed
were in bis own old area of
Yorkshire, and no area was
immune, said Mr ScargilL
Referring to the campaign to
save Snowdown Colliery in Kent
from closure, he said: “Miners
must recognise that the defence
of. Snowdown represents the
defence of all pits, and the
union must stand firm and
united in fighting to keep this
pit open.”
BUSINESSMAN’S DIARY
UK TRADE FAIRS AND EXHIBITIONS
Date
June 21-24
June 21-27
June 23-26
June 27-29
June 28-July 1
June 30-July 1 ...
July 24
_'V r 5: " J :i. .
"•*«&
• 1 J
. --*a
-t , :.
:r> 1
• V.
.
• > 1 1
July 6-8 ..
July 8-11
July ' 13-15
July 13-16
July 18-22
July 26-30
Aug. 8-12
Aug; 12-14
Sept. 5-12
Sept 7-10
Title
Royal Highland Show f 031-333 2444) _
International Food, Wine and Kitchen Exhibition
(06284 24421
International Fisheries, Processing and Marine
■ Equipment Exhibition— CATCH (0378 77966)
European Fishing Tackle Trade Exfltibition—
—EFTTEX (021-780 4141)
International Floorcovering Exhibition — INFEX
(02432 5537) :
Temperature Measurement and Control Exhibition
and Conference— TEMPCON (0822 4671).
South of England Exhibition of Homes, Food,
Trades and Leisure (0273 6S73S1)
Integrated Energy Exhibition (0272 572 624)
North London Home Improvement Exhibition
(01-328 8581)
EnviTonTOer.tal Engineering Today International
Exhibition and Symposium — SEECO (0763
71209) .
International Dental Exhibition — EXPODENT
(01-935 8200)
Harrogate Gift Fair (0282 867153)
World Congress and Exhibition for Ultrasound in
Medicine and Biology (01-486 6582)
International Gifts Fair (01-855 9201)
Wine and Beer Festival (01-778 1256)
International Air Show (01-839 3231)
Labe), Labelling, Marking and Identification
Industry Exhibition— LABELEX (01-467 7728)
-International Carpet Fair (021-705 6707)
Venue
lngliston Showground, Edbgh.
Bingiey Hall, Birmingham
Aberdeen
NEC. Birmingham
Olympia
Wembley Conference Centre
Brighton Centre
Bristol Exhibition Centre
Alexandra Palace
Wembley Conference Centre
Olympia
Exhibition Centre, Harrogate
Met Exbn Hall, Brighton
Olympia
Met Exbn Hall, Brighton
F am borough
NEC, Birmingham
Harrogate
Sept. 7-10
OVERSEAS TRADE FAIRS AND EXHIBITIONS
‘ June 21-30
June 22-26
r „
June 2830 .......
June- 29-Jnly 1
July 1-3--
July 21-34
July 31-Aug 3
Aug 11-15
Aug. 18-21
Aug. 10-21
>' Aug. 27-20
£ Aug. 30-31
Aug. 30-SepL 2.
International Exhibition of Instruments and Equip- .
ment for Cardiovascular Treatment and Cardio-
surgery— CARDIOLOGY 82 (01-235 3423) Moscow’
International Port Technology Exhibition — '
PORTECH (0883? 6155) Singapore
Videotex Exhibition (00274 28221) New York
Temperature and .Transducer Conference ' and
Exhibition —'SENSORS AND SYSTEMS
(02802 5226) Houston •
Electrical Engineering Fair — ELTEC (01-486 1951) Munich
Security Asia Exhibition (0483 38085) Hong Kong
Hamburg Trade Days (0202 732648) Hamburg
International Trade Fair for Hotels, Restaurants, .
• Catering and Food — HOTELRES (01-681 7688) Bangkok
Business Equipment and Computer Exhibition' —
COMBEX CQ48S 38085) Hong Kong
International Electronic Packa ging and Production
Equipment Exhibition — ENTER NEPCON (0483
38085) : f Singapore
■ International Men '5 Wear and International Jeans
Fair (01-730 4645) ..i.:;. . Cologne
Fashion Samples Fair — INTERCHIC (01-749 3061) Berlin
IndTO-Parfuraery Exihibtion (01-486 1951) Utrecht
1 BUSINESS AND MANAGEMENT CONFERENCES
outlook (01-621
y :■
sv-June 21-22
^ '
4'- June 21-22
■|: June 21-22
*--X . •
lc June 22 ...
v r
7 'June 22-24
.^. Lisbon
June 23-24
•4 June 24 ...
June 25 ...
.
June 28-30
June 30 ■...
Jc July 1
;- v July 5-6
7
L.julyS
, v . July 8
~ .July 9
;7 July 12-13
U'jiiiy 15
'i'jidy 15
v' Jttly 19-20
. .-. Artpone wishing
to
FT Conference: Portugal — a new
. . . 1355) .....
FT Conference: The Economics of Natural Gas
Development (01-621 1355) ‘Venice
AMR International: Cable casting in Europe — the
commercial future (01-262 2732) .
CBI: EEC Competition. Policy m . 1980s (01-379
7400) :
The Laboratory of the Government Chemist:
International Conference on Laboratory
Design and Servicing (01-928 7900)
The Aviation Business Centre Energy needs
aviation (01-439 1330)
LCC1: Berlin <01-248 4444)
ESC: Refusal to suppiy — cramping consumer
choice? (057 282 2711)
IAEE-BEEE: International eneTgy markets— the
changing structure (057 2S2 2711)
Energy Business Centre: Engineering Contracting
and Subcontracting in UK Oil and Gas
Projects (01-430 0021)
Institute for Fiscal Studies: Developments in
American tax policy (01-828 7545)
MSS Computer and Business Consultancy: Manage-
ment by objectives (Worthing 34755) ;
Energy Business Centre: China Offshore (01-439
9021)
CBI: The Protection of Hearing <01-379 7400)
IPS: Inventory cost and control (0990 23711)
ESC: Sponsoiahip— New media, new developments,
new project* (057282 2711) : 1
FT Conference: Business reorganisation — a
balancing of interests . (01-621 1355)
The Henley Centre for Forecasting: International
business prospects (01-353 9961)
American Chamber of Commerce: The Role of the
EEC Institutions and the Major Current Issues
Affecting Business (01-730 3176).
IAE.C: Power and Political Behaviours in Orgai»-
. sations (01-480 6106)
attend any oj the above events is advised to
ensure that there has been no change in the details published.
London Press Centre
Centre Point, WC1
London, SW1
Grosvenor House. Wl
Cannon Street, EC4
Bowater Conf. Centre, 5W1
Cambridge
Merropole Hotel, Birmingham
Regent Palace Hotel, Wl
Worthing
Cafe Royal, Wl
Centre Point, WC1
Kensington Palace Hotel, W8
Self ridge Hotel, Wl
Inter-Continental Hotel, Wl
Londoa Press Centre, EC4
Hyde Park Hotel. SW1
Greart Western Hotel, W2
telephone the organisers to
Financial Times Conferences
- BUSINESS REORGANISATION — A BALANCING OF INTERESTS
^ roirference! -which follows, the publication of the Cork Report, rakes place in- a year
t-^hen insolvencies have often been in the news and in fact have heroine- a matter of wider public
V 'cbncern. The conference will look at existing law and practice and at the American system by way
> of mntrJsf. which has great emphasis on judicial supervision. There will be a review, of the Cork
1-R^^tKnfe?enS will p&e the qu^lon /• Is toere a Better WayTJ’ •
“ ; the Phairmanfihiij of Lord Beoson, Bank, of England and Muir Hunter, QC, the speakers will
> Cork G^ly and Co.; Mr W. G. Mackey. Ernst and Whfnney: Mr S. A. W.
BsSI-B ank pier IlTw. Rudd Rowe Rudd & Co. Ltd.; The-Hon Thomas W. Lawless.
-•SStcfcS^BSSniaidMr L. K. Ptecott. Stone Platt IndusO** Ltd.
:: TEE ECONOMICS OF NATURAL GAS DEVELOPMENT
is" nleaS to announce that this major international symposium is to be
\ Kam^El Ayouty. Deputy Chairman, Exploration and Production, Egyptian
'letioKc^raS^n ^(EG?C1. who wiU complement Ir WijarSo Mr Adrian L^ous Vargas
A. eSSSSt HonSadaromp in the section .of the seminar devoted to developing country
D^ionscnat ziuubJ to held just after the lOU meeting- m Lausanne has
" Europe the United States, South East Asia and Latin America. The
sSr bankciu officials, energy wmpany e^trves. consultmts arid top
-meeting m > amacang sec for: The total number of registrations, that can ;be taken for
^5pS Md^rarticaJ mating , is liinited. Some places, still , remain available and the
l,addressior registration- is given below.
i- AU enquiries shonW be addressed to: .
inemandanmes Conference Organisation C(?NFG
“ - ■ - - Cabfe FMCONF
Government
expected
to raise
NHS offer
By Our Labour Correspondent
THE GOVERNMENT wiU
today meet leaders of the
health service unions and is
widely expected to improve
its National Health Service
pay offer .in advance of the
nest 24-hour strike set for
Wednesday.
Prospects of an increased
offer ‘being made by British
Rail, though, seem slim, even
though BR is likely to meet
the unions either tomorrow
Or Wednesday.
BRV largest onion has
threatened an. all-out strike
from a week today.
Mr Norman Fowler, Social
Services Secretary, has called
' in the TUC. health services
committee and -the non-TUC
Royal College of Nursing for
discussions this afternoon to
hear reports of the efforts of
Mr Pat Lowry, chairman of
the Advisory Conciliation and
Arbitration . Service, and of
the Government’s response.
All sides were cautious
yesterday for fear of pre-
judicing the delicately-poised
negotiations. However, there
was a dear Insistence on. the
part of trade onion leaders
that the Government would
exacerbate (he current dispute
If it called in the unions with
no Trcsh proposals to pot to
them.
One of the most widespread
foreeasts is that the Govern-
ment will increase its 6.4 per
cent pay offer to nurses to
about 8 per cent, and raise
the 4 per cent offer to other
NHS workers accordingly.
Some union leaders yester-
day insisted that such a move
would not be sufficient to
avert the cujrent action.
They thought the offer to
ancfllarfes would have to be
raised at least to match the
current nurses proposal.
The attitude of the Royal
College of Nursing may well
be crucial.
la addition, much of Mr
Lowry’s efforts concentrated
on the Government’s long-
term proposals for NHS pay.
and today’s talks may well
see ah amplification by the
Government of previous hints,
that anciliaries as well as ’
nurses should be included l«
such arrangements.
On the railways, BR is
hoping to coax Its union
leaders back into talks follow-
ing a meeting today of the
executive committee of the
train drivers’ union.
TGWU urges Owen
to quit seat over
dockyards letter
<SY OUR LABOUR STAFF
BRITAIN'S LARGEST union,
the Transport and General
Workers, yesterday called for
the resignation from bis parlia-
mentary seat of Dr Dantid
Owen, who is figbting for
leadership of the Social . Demo-
cratic Party with Mr Roy
Jenkins.
The TGWU is angry about a
letter from Dr Owen to trade
unionists in . Devonport dock-
yard in his Plymouth con-
stituency which asks them not
to support the campaign against
closure by workers in the
Chatham dockyard.
Mr Mick Martin, TGWU
public services national secre-
tary. said yesterday that Dr
Owen was tryiog To set “one
dockyard worker against another
in order to save his seat: Offi-
cials pointed out the narrowness
of Dr Owen's majority over the
Conservatives in the last elec-
tion.
In a reference to a recently-
failed SDP parliamentary candi-
date. Mr Martin said: “ I believe
he should have the integrity of
Bruce Douglas-Mann and give
the Devonport voters the oppor-
tunity to decide whether they
want him to continue as their
MP.”
Dr Owen's private letter says:
“I do not believe it possible
for the Government to continue
with all four dockyards at
present capacity and present
levels of employment over the
next four years. There is no
escaping the reality that if
Chatham is retained there will
be cutbacks In Devonport.
“ I did therefore want to urge
you not to give support within
the unions represented at
Devonport for the retention of
Chatham.” Stressing that this
is not a “ selfish argument," Dr
Owen warns of the possibility
of a loss of 4,000-5,000 blue-
collar Civil Service jobs at the
Devon yaTd.
On the Falklands, Dr Owen
says: "I am fairly sure that the
Government will decide to
retain a slightly larger fleet
which I would welcome, pro-
vided we do not learn the wrong
lessons from the Falkland
Islands crisis and continue with
a big ship navy.”
• The Government has issued
confidential advice notes to
local authorities on the pay-
ment of social security benefits
in the event of industrial ac-
tion by white-collar civil ser-
vants. Action of this kind last
year forced benefit payment to
be switched to local councils.
In a letter to councils, Mr
Eric Caines, regional director
of the Department of Health
and Social Security, stresses the
department’s determination to
contain the effects of industrial
action.
However, be adds: “ We have
to recognise that it may he
physically impossible for us to
contain the situation ourselves
and in these circumstances we
are bound to say that we should
ask local authorities for their
help.”
20 prints for £2.25
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London Tube disruption
over rosters likely today
BY PHILIP BASSETT
UNDERGROUND rail services
m London are liable to serious
disruption today over the intro-
duction of new timetables. The
industrial action would follow
increasing disruption during
the weekend.
Mr Bob Kettle, secretary of
the National Union of Railway-
men's London Transport Dis-
trict Council, said yesterday
that b complete shutdown of
the Tube system today was
“quite likely.”
London Transport's (LT)
new timetable is to come into
force today, with new work
rosters for its 15,000 Tube
workers. Mr Kettle said LT
was being “ bloody-minded."
and hoped the introduction • of
the rosters would be deferred.
Union officials were particu-
larly angry that the new
rosters, which they claim mean
job cuts, are to be Introduced
before any agreement on pay.
Pay talks are set for Wednes-
day.
Industrial action hit the
system again yesterday, follow-
ing disruption on Saturday.
Passengers cm the Piccadilly
and District lines were affected.
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NOTICE OF NATIONAL AND INTERNATIONAL CALL FOR
TENDERS No. 16/B2 "SDMC "
A Nonce ol National and International Call lot Tenders is launched
with respect to the Provision of Furniture lor the following Lore:
LOT No. 1— Equipment. Classrooms and Lecture Rooms
LOT No. 2— Classroom and Lecture Room blackout screens, intended
io divide the block of U.5.T.H.B. Classrooms and Lectdie
Hoquis.
The .specifications may be obtained tram the Siege du Minis t fere da
I'Enseignement at da la Recherche Sciancifiaue— Giraction do I'lnlre-
sUucture ei de I'lQuipement Umversitaira (head office ol the Ministry of
Education and Scientific Research — Directorate for University Infrastructure
and Equipment). 1. Rue Bachir Anar. Place du lor Mai fAlgiera).
Offers, accompanied by the required documents, should ba forwarded,
in a double sealed envelope, ro the above address.
The outer envelope, which should bear no mention making, possible
the Identification of the tenderer, ■ should bear, in addition to lha address
ol ths Ministry of Education and Scientific Research, the mention " A.OJV.
•t A. O.l. No. 16/82 ** SDMC '* Eauipement Mobllier Dedoublemem Bloc
des Classes et Amphle de I'U.S.T.H.B,. sou mission ne pas ouvnr 1 *
(A.O.N, and A.Q.I.. No. 16/82 SDMC ” Furnishing Equipment-Division
■n two ol the U.S.T.H.B. Classroom and Laciure Roorh Block; tender—
do not open). . .
tn accordance with circular No. 221 DG-Cl-OMP dated 4.5.81, issued
by the Ministry of Commerce, offers must be accompanied by the
following documents:
(a) The Articles or Association of the Company, as well as a list
ot the main shareholders or partners.
Fiscal situation in Algeria and in the country of (the company's)*
head office.
List of the main shareholders of the Company.
Balance sheets for the previous two (2) years.
Certification ol non-recount to mtarmediariaa, in accordance
with article 12 of LAW No. 78/02 dared 11 February 1878. with
respect to Scats Monopoly on External Trade-
Distribution of Share Capital in the case of rhe landers' being
a Joint Srpck Company.
The final data for receipt of offers is fixed at 45 days with effect from
the date on which thrs nolice appears in the national press.
Tenderers remain bound by their offers lor a period of 120 days with
offset from the closing data.pl this notice. ,
Your attention Is drawn io the fact that this norice excludes amalga-
mations, company representatives, agents end Other intermediaries whose
intervention is prohibited by Law No. 78/02 ol 11 February 1978 relating
to State Monopoly on External Trade.
tb)
(cl
(d).
(»)
tn
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CITY OF COPENHAGEN
UA 20,000,000 1976/1986 BOND5
Notice is hereby given to Bondholders that, during the twelve-
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been purchased for the account of the City in satisfaction of the
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Outstanding amount: UA' -16,250.000
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THE FISCAL AGENT
KREDIETBANK
S.A. LUXEMBOURGEOISE
BOND DRAWINGS
CHILEAN EXTERNAL LONG TERM OUT
LAW No. B9E2
CHILEAN GOVERNMENT
COQUIMBO RAILW AY BONDS
NOTICE IS HEREBY GIVEN that all
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redeemed at par on 30th June
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These tends _wheo nresented at the
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from which date all Interest thereon wUI
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ELECTRICITC DE FRANCE
US SI 25.000.000
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, DUE 19£a
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te lodged, together with the appropriate
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21 June tBB2.
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L-A.%Y Mo ttO fT?
ciTv of Antofagasta ichilei
. 5*. STERLING LOAN OF 10f4
NOTICE Iff HEREBY GIVEN that all
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— redeemed at ear on 30th June
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wfli eeasa.
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LLOYDS BANK INTERNATIONAL
LIMITED
London.
CLUBS
THE GASLIGHT OF ST JAME5'5. London's
most exciting businessman's night club.
No member ship needed. I bars, doaens 01
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Acts. Happy hour 8-9 pm. if required
supero three-course dinner, only £9.75,
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9 Phil. Open Moo-Frl. 8 pm-2 am. Sat.
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EVE has outlived the other* because of a
Policy of fair play and value for money.
Supoer trom 10-3.30 am. Disco ana too
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CHILEAN GOVERNMENT
41; r„ LOAN 1 BBS
CHILEAN GOVERNMENT
4 ;*« BONDS 1893
NOTICE IS HEREBY GIVEN that all
ihe outstanding Minds of tnc above-
mentioned loan will be redeemed at
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These bonds when presented at the
othce of Midland Bank ole. Stork
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CHILEAN GOVERNMENT
4 LOAN IBBS
_ Coupons 195-ZOO
CHILEAN GOVERNMENT
, 4:;-„ BONDS 1895
Interest Payment In respect of Coupon
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THE MANAGEMENT PAGE
EDITED BY CHRISTOPHER LORENZ /
Why Bendix is set on a
.'.^17 '.;V.y
path of constant change
David Lascelles looks at the significance of the
left the U.S. industrial group with a
restructuring which has
pile of cash
| Net sales, f 1 '
royalties, aether
operating income
IS IT “right" for a thriving
industrial concern to sit on a
huge pile of cash when it could
he using it to lay the founda-
tions for future growth? On
the other hand, if cash offers
the highest return, why plough
it into bricks, mortar and
machinery? And why be in a
hurry to invest in a new busi-
ness when markets are as uncer-
tain as they are today?
These are the kinds of
questions that Bendix. the large
U.S. industrial components and
machinery company, has stirred
in the U.S. corporate world as
its chairman. William Agee,
pursues a strategy of what he
calls “ financial flexibility " — ■
or what would be known in
another jargon as “ hanging
loose."
Thanks to some well-timed
divestitures over the last two
to three years, Bendix has about
S54flm sitting in the bank and
in liquid securities. This equals
about a sixth of its total assets,
and more than a quarter of
its current assets. The money
may not be turning out spark-
ing plugs, aeroplane wheels or
machine tools like the rest of
Bendix. fBendix has not made
a washing machine for 40 years,
incidentally.) But it is reaping
a hefty rate of interest at a
rime when opera tine profits are
slumping because of the world-
wide recession.
For the first time in 12 years.
Bendix expects Its profits to be
down this year. They were
S453m on revenues of $4.4bn
last year.
Bendix is headquartered in.
Detroit, a town where they
pride themselves on getting
their hands dirty, and some of
Agee's fellow businessmen are
not too happy about the w?v
be sits on money. Their
thoughts run something Sion's
these lines: a business is a
business: it is not a bank or a
pension fund or an nvesf-’e-'t
firm. Money should produce
things, not just more mn-pv. .
And. anyway, if everybody ri*' 1
things Aaee’s way, who would
actually deliver the goods?
Agee is a clean-cut 44-vear-
old with a financial back-
ground. When he took over
Bendix at the age of 39 he was
the youngest chief executive of
a major U.S. corporation '
Since then he has, pexhaps.
become best known in the
world at large for his romance
with Mary Cunningham,, his
one-tune vice-president of
strategic planning whom he
married this month The affair
brought embarrassing accusa-
tions that Cunningham had not
been promoted for her business
abilities alone. This triggered
a major row at Bendix and
caused Agee to complain of
*■ damaging and . hurtful in-
nuendos.”
But he enjoys the contro-
versy* over his business tactics
and claims to feel “very com-
fortable ” with what he is
doing. “I am a contrarian by
nature," he says.
As Agee explains it there is
more to Bendix’s strategy than
just a willingness to keep a
large proportion of its assets in
cash. He believes that in this
day and age it is not enough
for management to make the
best of its traditional line of
business. Corporate executives
should feel free to pull out of
unrewarding industries and
move into new ones— or merely
pull out and wait te see what
happens, constantly reassessing
the prospects.
His underlying goal has been
to cut Bendix’s dependence on
the unpromising auto market
and push the company closer to
the forefront of high technology
while - lopping off some
extraneous bits and pieces at
the same time.
The company now has, three
main divisions: automotive
(brakes, engine parts, friction
materials), aerospace electronics
(aircraft parts, .electronic
systems, instruments military
equipment) and industrial
(machine tools, robotics, indus-
trial equipment). But in re-
shaping Bendix since be took
over five years ago from Michael
Blumenthal (who went to Wash-
ington as President Carter's
treasury secretary) he has not
afraid to shrink the com-
pany down— which some people
find shocking in this, expansion-
minded age.
His major divestitures have
included automotive subsi-
diaries. large fores*. rv holdings
and a 20 per cent stake in
Asarco. a leading U.S. copper
producer. The last two were
bought as* inflation hedges and
sold very profitably.
But while these moves filled
Bendix’s bank account to over-
flowing, it also left Bendix 20-
per cent smaller in terms of
fixed assets in the space of only
a year because the proceeds
were not redeployed.
Agee sees nothing wrong in
this. "There is a time to sell
and a time to buy, and if they
come together that is nice, but
it is not necessary.”
But while Agee may now be
sitting pretty with loads of
money at a time when interest
rates are yielding their highest
rial returns jn decades, the
...i*
HOW MANY middle managers she 5*ys. t^y, necd.-Wfc the
do you know Who, at one and .dpjmrtuailies' aii<f ..incentives to
the same time:
reach, beyond their formal jobs
• Feel comfortable about deal- and use ]. ate operatidct's : re-
hL ■ ■ - - onfvNkhr* itl . . Vi mr nratre ' '
"j. .risiA
„tg with change:?*
sources- 7 in Jiewj ways/ Such
# Hav a clarity ; of - direction opportunities Be created
which enables them to view.set-. a ' ^
. , u . • ■■ tinrifil nmnone ” tAr mnranthAn
3 Income from
'continuing opera!
1S777S '79 »S0
1077 78 *79 ’SO *81
surprisingly, he is a little secre-
how will Agee manage the oology field. Meanwhile, though, strategy perfected by masters or says that five years from now
re ^ n a" . he has not been entirely idle, the art like Gulf and Western autos will account for 30-35 per
For Agee, though, that misses “ '
But if one strips Agee's expects to expand around its
philosophising down to its bare automotive business and streng-
essentials, is be not just laying then its position in fasten
out the kind of conglomerate growing markets. McDonald
strategy perfected by masters of says that five years from now
In 1980. he bought Warner 1 and Teledyne, which have both cent of profits compared with
the point. Bendix is not about and Swasey, one of the leading a massed .huge, loosely" strung
to make s single huce acauisi- machine tool makpn in thA ir s business empires?
to make a single huge acquisi-
tion which will put it on a new
strategic course for good and
all. It is the beginning of a
machine tool makers in the U.S.
for $300m. Early last year he
bought back a sixth of Bendix
stock in the open market, a
02 per cent five years ago.
But stimulating -though the
Agee recoils at the ide». rapid pace of change at Bendix
‘‘Teledyne has pursued a very must be, it is also "exhausting
process of constant change. The popular ploy these days because
image used at Bendix is of a share values are so depressed.
..successful strategy,” he says, and — for employees sitting in
“ But we do not have the same coaches about to be- dropped
train speeding along the track This had the effect of boosting
picking np new coaches at the earnings per share.
resources. Also I do not envision 0 /f at the rear-— demoralising,
the day when our tenacles will Agee concedes that this is a
front and dropping off old ones
at the back. Sooner or later, it
becomes a new train.
Agee also happens to believe
that a corporate investor gets
a better bargain if he buvs a
minority stake in a company
be all over the place/
More controversially, during
last winter Agee bought a 7.3
per cent stake in RCA, the
broadcasting and electronics
conglomerate which suffered a
problem and he tries to tackle
Also, for all of Agee’s pro- by being candid about his
testations about flexibility, plans, though not always, with
Bendix is going to be stuck with desired results judging by
industrial components and the
sounds
dissent that
drastic
auto business for a long time, occasionally escape from Ben-
eamings as Agee admits.
because of problems in sub- Alonzo McDonald, the presi-
dix's offices.
A company
rather than .taking it over out- si diaries like Hertz and NBC. dent - maintains that Bendix rouch m0 ney is also a mouth-
right. Tbis is because minority The investment stunned RCA serves such a diversified range W aterins takeover target which
interests are usually bough) at and goaded its new chairman, of the auto market that it will means Aeep must look fa his
fk. : .l. ! rm. r> i.l : aluratre fin#l enmp bUOyaOCJ* - 6 0 1 w 1113
the company’s going share price
while complete takeovers com-
mand a premium, a pheno-
menon known in Agee-ese as
“ the retail plus, wholesale
minus paradox.”
What with staying liquid and
buying minority stakes here
and there. Agee sees him self
more as a manager of corporate
assets than the chief executive
of an industrial concern.
But hew does Agee propose
to spend his cash hoard? Not
Thornton Bradshaw, to issue a always find some buoyancy aSnees Ts often as be scours
bitter denunciation of Agee, ^ n W the horizon for fresh conquests,
including a pointed remark Slicing it another way. about ^ . markp > ra m*t»li<?atinn
about hil“ personal affairs.” half its business is in the “Jg”
Agee maintains that RCA Is re P ,a cement parts market as ac qui rer wou i,j on |y ^ave to put
half its business is in the
replacement parts, market as “ ^ 2? A MSS
- mem market TrariitinnaUv wheel U P Because ue couia
are fully discounte_d in the SSfaTJ finance the rest of the deal with
share price, and Bradshaw’s
efforts to put things straight
can only do good. But Bradshaw
is having a tough, time turning
RCA round, and RCA shares,
which Bendix bought for just
over $ IS, are now just over $16.
wutr lug vuiGi uv- n «. . . . * . ,
if people are not buying new Bendix’s own cash. Agee claims
cars, they are buying bits to *? e ^ osea Q0 steep over that
keep their old ones going.. And d 5 ns ? r * .K Q on ^ because a largfr"
about half Bendix*s vehicle bus!- chunk of Bendix stock is owned
I wmcn cuauica cueui t,o .vicn-avi- \ — ■ ~ - —
backs ‘‘'as temporary blips' ip tional supports, .for. Innovation,
an otherwise straight to a .# " Multiple ropoztjhg relatiofl-
gflal . •■* ;:*v‘ .''.** •■/ ' •:*: /-Ships ^ahd' oyerlappine- . terri-
• Are 'thorough in every thing, torles.; These Jbree middle jnan-
rncludxng their. ’office- .politics agars .' to carve - out. their own
• Have a participative manage- ideas and; scR ' them ~te their
ment style?; "V" : pe^ in ueighbouriag: areas; or
• Are persuisivei '-p^^eat .-'. 10 :* 11 ®^ .than ; one boss; *;
and discreet 7 - • A* free apd somewhat randote
Such paragons are What Pro- .flow of inf ormation^ VData flow
lessor Rosabeth Moss Ranter, in of thi? kind* prods .executives
an article in the July/ August to find ideas in unexpected
edition of the Harvard Business .-/places and, pushes them to cflto-
Review", calls, middle manage- bine f ragmfi nts-pf information-”
-ment innovators. To most' /of:. • Manv Cmtres ,of,pbwer with
‘ us. the list o£ : 1hi£lr' attributes' .some budgetary; iflexiMity.- ; If.
niav read rather like.a speeifica-.such : centres . are easily acces-
tion for an idealised executive : . stole; to- middle managers, they
of all virtues* but Professor -will fee \ etwxmragid . to make
Ranter icsists that such- people proposals . and : ' “acquire'/
are not extraordinary.. respuroefl^ *■**...%'
-But as many chief executives .• A. tdgh proportion' of man-
have learned to their cost. they , agers m loosely-defined posi-
are * certainly . all too rare. . TKff j ' tions ' or ambiguous "assign-
middle mansfger.can prove a far '• merits. ■ Those sifli-
tougher barrier to change th$a, ordinates or line responsibilities
at the top end of the prgatitea^ Who /are told '.to “solve prob-
tion," risk-shy boardroem 'col-, leihs’* .must- argue-for a. budget
leagues, or — at .the bottom — ■ -_or develop thpir .own: “cost
recalcitrant trad^. unionists.- . gtituency'.”:.'
is on his or her resistance that . Frequent" and smooth cress-
so many brilliant growth stra- functional contact, a traditioa
tegies have collapsed; equally. Lt of workingHh teaxns. and empha-
is the apathy or opposition of •• sis on lateral rather thqn yerti^
middle manaaemeiit which has cal '.relationships as a . source of
helped torpedp various attempts, resources, information jn£ sup-
to improve communications and; port. .-‘These circumstances
consultation with the shop floer, ..require manager's to getrpeer
0 . j 1 .support. for their project before
■ handwicn . top officers approve,” says Prof
■ Ranter. ...
To mix metaphors distaste- # a reward . systan ; “ that
fully, the middle manager is the: cmphasisesinvestmentinpeople
filling in the middle^ of. . toe. . gB( j rather than pay-
ness is in trucks, half in cars. ^7 company employees who. he
By the time you shake all that thinks, would stick by him. ■
filling in the miqdie 01. .• me aB d projects rather : than pay-
orgamsational sandwirtr; .w% : : ment f0r ^ gerviaa." ' •
out him, the corperation loses , 50m* of these cendititos seem
its bite. ....... ■ _ , to" be characteristic .-cf new
• In the tonnltable « companies in hot-yet-matore
Professor Ranter, - top leaders Pmf Runier . admits.
down, it means only 10 per cent
of Bendix’s sales are to the U S.
But whatever his own em-
ployees and his fellow business-
THE CHANGING FACE OF BENDIX
ACQUISITIONS: 1978—30 per Asarco stake (9336m); 1980—
cent of Asarco ($128m); 1980 Skagit winches ($16m plus;)
— Warner and Swasey 1978—50 per cent interest in
($300m); 1981— boy back of Dncelller * (S36m); 1978—
SlOO^ - (S25.8m); 1981-Uniled Geo-
DISPOSALS: 198t— Forest physical Corp., oil services.
Holdings ($425m); 1981— ($80m).
new- car market, which has men might think of Mm. Wall
suffered the severest decline. Street likes Agee. His piles of
McDonald expects the next cash, the prospect of huge deals
few years to be a *’ tough grind "
when Bendix will, have to find
market niches and try to
become the low-cost producer.
and the excitement he generates
makes for a lively, stock and
potential for rewarding mergers
and acquisitions business. Even
But after that he foresees though Bendix: depends oh
•' terrific business " as the U.S. cyclical markets which are all
goes through a phase of sweep- weak ; at ' the . •; . most
ing re-equipment. maior "stockbrokers rate it a
'£SSKSS5*3U"r S,g*£
staffs’ activities accordingly-”' ':' * - The middle tnanapers-inno-
pjpr should » senior anfl^top ,.votdf. n : Reprints. :
management have ah' exclusive -Reprint: Service, Haroard Busi-
claim to the inltis tionV of new", ness Revieio. Boston, M A 02163/
. . ’.V • rro'd »TWV 7M! /S7S7 -
In the longer run Bendix “buy.*'.
major 'stockbrokers
TECHNOLOGY
EDITED BY ALAN CANE : JttimCopm
Elaine Williams visits the Royal Signals and Radar Establishment where . . .
Defence electronics need more cash
MEL looks for
Compressed Airjechrvology.
THE ROYAL Signals and Radar
Establishment, Britain's main
centre for defence electronics
research, needs more funds to
help it keep up with modern
electronics research.
Mr Andrew Smart, RSRE’s
director, said the establish-
ment, was moving towards more
capital intensive programmes
such as the design of very com-
plex silicon chips. “We are
short of money to make best
use of the people we’ve got,"
he said.
Cutbacks
Like most Government estab-
lishments, it has not been
immune to financial and staffing
cutbacks. Over the past three
years, the number of its re-
searchers has fallen by about
20 per cent and the establish-
ment is increasingly concentrat-
ing on the longer term re-
search, and handing its find-
ings to others for development
At RSRF. which lies at the
foot of the Malvern Hills same
picto miles from Worcester,
r-*«:parch is primarily aimed at
new electronics devices which
find their way into all forms of
radar, communications and air
traffic control systems, used by
all the armed services.
Though the notices in RSRE's
washrooms say “wash up, bush
up and keep our secrets secret,”
there are many cases where it is
willing to share its information
to help British Industry develop
new products.
In fact, the establishment has
won three awards for techno-
logical achievement and works
closely with industry. For
example work at RSRE has given
the UK 50 per cent of the world
market for liquid crystal
materials which are used for
digital watch and other types of
disc lay. .
Part of its £40m funds each
year come from the Department
of Industry and the RSRE
believes that it must continue
to strenghten its ties with
industry to help generate more
revenue by selling its expertise.
The problem for RSRE is
that much of its research is
centred around electronics
which requires expensive invest-
ment in capita] equipment.
Dr Bill Fawcett head of the
Physics group, admitted that
RSRE had a very poor facility
for making integrated circuits
compared with industry. The
go-ahead was recently given for
better equipment to" improve
processing of silicon.
Recently Dr Fawcett and his
team made proposals to the
Government for a £30m to £40m
scheme to develop advanced
silicon chips for future defence
equipment This would match
a similar development pro-
gramme now underway in the
UB. to produce smaller but
more complex electronic
circuits.
industry and are about to go
into production. These include
new types of liquid ciystal dis-
plays using colour, portable
satellite communications links,
and lightweight field glasses
which can pick out objects
clearly at night.
And the organisation has
found no less than three ways
of helping helicopters avoid run-
ning into overhead cables. In
the past six years there have
been moib than 40 incidents
involving military helicopters.
smaller overhead telephone,
cable used in the battlefield.
Once a laser is installed, how-
ever, it can be put to other uses
such as target recognition and
terrain following.
Recently, the establishment 1
began experiments with its 1
latest version of side scanning
radar installed for Sight trials
on a Canberra aircraft.
more
Efofitfrom
an* experience
Hemel Hempstead
(0442)61201 •
BY GEOFFREY CHARUSH
Lasers
Such a programme lasting
about five years would involve
the UK electronics industry
with the eventual hope of com-
mercial spinoffs. Dr Fawcett
has no idea what response the
government will make to the
proposals which he sees as
important to maintaining
superority in weapons develop-
ment.
Despite the constraints,
several of its 100 or so research
projects have been taken up by
British Aerospace Dynamics
is about to start production of
the simplest systems devised by
RSRE which can detect, only
power cables by sensing the
current flowing through the
wires. It indicates where the
cable lies in relation to the air-
craft within a range of about
500m.
Mr Keith Potter at RSRE
believes that lasers will eventu-
ally" be- used on helicopters.
Research has shown that lasers
can accurately detect even the
Side scanning radar is in-
tended for reconnaisance work.
As its name implies it scans to
one side of the aircraft so that
an area of interest some distance
away from the flight path is
covered. The greater the dis-
tance the aeroplane is from the
target, the* safer, in theory is
the crew, and the enemy has no
idea in which area the aircraft
is really interested.
Researchers say that an air-
craft can be tens of kilometres
away from the target and the
clarity of pictures obtained
from the radar signals — after
suitable computer processing—
is such that moving objects such ■
as cars can be seen. Outlines
of houses and roads can be
identified.
Stock control by satellite on Texaco ships
BY ANDREW FISHER, SHIPPING CORRESPONDENT
MAKING MONEY eut of
shipping, especially in the
befeagured tanker sector, has
become a strenuous under-
taking these days.
In a bid to hack away at some
, of its operating costs. Texaco,
the UB. oil group, is installing
a new type of maintenance and
stock control system — using
satellite — on its UK flag ships.
Clearview Associates, a
Bermula-based oil consultancy
concern, will complete the first
system for Texaco Overseas
Tanksbip (TOT), based in
London, on the 80,000 dead-
weight tonne Texaco Windsor
in September. Installation on
other TOT ships — there are 13
ia all, including three laidnip
— will be completed nest spring.
According to Clearview, the
system — the company says it is
unique — can save over a quar-
ter of operating costs. Other
shipping companies are also
showing interest and the sys-
tem is adaptable to different
types of vessel -
CV International, part of the
Bermuda company, has con-
tracted a UK company, Altergo
Business Systems,.- to develop
the computer system - which TOT
will .use. Trials have already
taken place on the Texaco
Windsor.
The system will be divided
into three areas; inventory stock
control; preventative main-
tenance; anti shipyarding
(periodic shore work needed
on vessels). These phases will
operate together.
Thus the management teams
on board ships and at fleet head-
quarters will have up-to-date in-
formation on which to base
future work planning and
budgeting.
The telecommunication sys-
tem wijj use the new
INMARSAT' satellite to allow
two-way links between the HQ
and the vessels. The IBM
System 34 at the London office
of TOT will thus communicate
with the IBM System 23 sh the
selected ships.
TOT said it ebese Clearview
because of its background in the
oil world. TOT began looking
at computerised preventive
maintenance and stock coptrel
systems four years ago.
continue to run its fleet out of
Britain more competitively.
“The economics of running
British ships are coming under
increasing pressure and any
gain in technology wiH help us
in this way,” It said.
THERE IS an irritating
problem that besets any UK
company supplying defence
electronics. It is. simply, that
although all sorts of high
quality research and develop-
ment may he ia progress and
excellent systems supplied to
tfie armed services, very little,
if my detail can be revealed.
This is one of the things that
Kenneth Bacon, the new manag-
ing director of MEL (a Philips'
division) would dearly like to
change, if only because it would
help in the special export
effort the company is making,
with new offices in Washington.
Toronto and in InAli.
Until recently MjSL had been
having a rattier rough time.
Over the last three . years
“several millions*' of pounds
were lost and tile company had
to shed well nigh a third of its 1
workforce to match the size of
the order hook.
It suffered, in particular,
from the loss of mrior Iranian
com ran «s after the 1979 revolu-
tion; and was hit by the MOD
decision to reduce the size of
the Royal- Navy surface' fleet.
Civil orders for MADGE, .the
helicopter microwave . lauding
system, did not ma’erihiise.
. MEL is now prnfitphie, . .Hpt
that is net flhe epd pf the sforv".
says Bacon, who is surprised at
the "poorly perceived image of
SEEL." He has appointed 'a PR
agency ana had the company
logotype redesigned.
Electronic
colour
assay
AN ELECTRONIC colour
measurement. system just intro-
duced into the UK by Joh&e and
ReiUiofer is transportable and is
able to produce a complete
spectral analysis - of reflect ed-
tight to-gfve an immediate.prtnt-
out of the results.
Kenneth Bacon
It can provide an accurate
evaluation of - any surface?-
paints.- dyes and- inks - for
examplfr— and it enables -colour
matebiog to be perfornred to a,
degree of repeatability which,,
it is claimed, is virtually
unobtainable . by other methods.
Matilda. slill classified
offiMnllj', is known to examine
radiations impinging "ou; the
ship rprm any direction, in
frequency bands likely to be
used by missiles.
The . measuring head; about
the size of a milk bottle, is con-.
Then, -SDSL's Protean Chaff
launcher , can be deployed at
exactly- £he right moment. It
is. essentially a mortar that
throws up hot objects behind
the ship to misdirect infra-red
seeking craft or metal foil
clouds (chaff) to confuse, radar
homing systems. The ’ bridge -
gets- a. quick verbal message—;
generated electronically— with
a jough . bearing shown on a
simple quadratic indicator.
Invisible
Included in the computerised
inventory stock control system
will be a full listing of
machinery and spare gear and
full reordering information,
with approved minimum and
maximum levels. Automatic re-
ordering will be possible as the
minimum stock levels are
reached, „
Texaco tankers’ will use the satellite system
It decided to go ahead with
the project as part of. its
intended improvement in com-
munications between the. fleet
and shore headquarters ’ and
devolution of management
decision to each ship.
“The decision to undertake
the work was taken in order to
improve the cost aHd manage-
ment of the fleet," said TOT.
Texaco is- interested in systems
like deal-view's so It can" use
technical skills ia the UK and
The programme’s . preven-
tive maintenance facility will
have a complete list of work to
be done in a five-year period for
each vesaeL Priority of work,
its required frequency, the
budget costs, planned start and
completion dates, and estimates,
of spare parts and- manhours by
skill needed wil) 1 be listed.’ :
Thus, said Clearview. man-
agement will have critical data
at sea and onshore which was
not previously available.
" We have been peen” jie-
said in Lotion recently, “as
highly skilled but almost
invisible.”
Marketing, ton. has come
under rh'e microscope .and
Michael Whiteman, fronT"
Ferranti Computer Systems, .
has just been appointed market-
ing director. ;
• Bacon has. in addition, re-,
organised the- company - in^o
three divisions: avionics, com-
munications. and electronic
warfare (EW). The greatest of:
these, he predicts, wifi -fee EY,.-.
One or two of the products i*
these areas will certainly be
boosted By events in the Falk-
Iands and Middle East For
example, MEL hints that wider
use ef Matilda by . any naval
force would offer about a 70 .
per cent chance of diverting an .
incoming : missile 7 sueh* . .’as -
Exocet
.netted by lightweight cable tb !
a data processing unit The
operator simply applies the bead
aperture to the surface.- auto-
matically triggering a. Xenon ■
flash, . the reflected light of'
which is spectrally ' analysed. 1 in 7
. about 20; milliseconds-.
Measured’ - outputs;- 'iniflqdt i
tristimulus, values, land - ;chro ;
; tnatidicy' coordinates, a: graphic
. plot. of spectral reflection add
alphanumeric .data of the refleo-
tion with a resolution from one
to 30 nanometres. More «ir
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ip'r L 1
MEL is. also in the. business'
of airborne early warning radar
with a system called Sea
Searcher. This has a higher
power than some systems and
a correspondingly long (undis-
closed) range. The equipment
will be going on to the ■ Sea
King helicopters, but time
scales, prevented its deployment
in the South Atlantic where, it.
is understood, it would have
been able to detect incoming j
aircraft . and .perhaps :sea-,;
-skimming missiles. Its primary
purpose is detection of surface
vessels, at long range, "y- ; ‘
drawn arc
The . company supplies the'
Royal Air Force, too. and has;,
just wwr a-£2.3nr order for EW
[equipment far conjunction -with 1 -
Feirahtl..'.
^ AN ELECTRONICALLY : con-
trolled. drawn-arc stud welding :
system; requiring nq ■ Separate
power, source ha& ;feeen-upfri¥-.*
dueed by (^mpten Partonpan,
a- Hawker Shldeley’ subsidiaryi .
; The* - system comprises - an ' .
integrated pcwerv*borae :.&<£
controller whlch wofks^sff a: .
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open
THE ARTS
Architecture
Colin Amery
tdeas percolate slowly, in the
field of architecture it is some-
times difficult to detect con-
sistent intellectual activity that
. te. actually producing results
that we can see being built
around us. Ten years ago the
Council of Europe arranged the
enormous and beautiful Neo-
Classical exhibtion that filled
most of London’s galleries for
s memorable period.
, Today there is no doubt that
it Is these same Meo-Classfcal
ideas that are filling the- heads
r of students and architects alike
We. have yet to see a fully
fledged revival of Neo-Classical
building but there are plenty of
interiors in London that indicate
a . serious application of the
principles. I will be writing
about some of these in future
with particular reference to the
decorators and muralists who
have, recently completed good
work:
.It -is .more difficult for archi-
tects" to . realise their ideas and
; in England we will have to wait
fox the completion of the exten-
sion to the Tate Gallery by
James Stirling to see concrete
evidence of his conversion to
the canons of classicism. The
burghers of Stuttgart will not
have to .wait so long as Stirling's
new art gallery and museum
.there is rising very quickly.
: Aft -the Architectural Associa-
tion- (34-36 Bedford Square,
London WC11 there are two fine
exhibitions that demonstrate an
awareness of the architectural
climate - and a sensibility to-
wards fine drawings and classi-
cal order. Freidrich Wein-
brenner -(1788-1836); if he is
known at all in this country, is
best remembered as the archi-
tect who gave the city of Karls-
ruhe its formal heart. He
deserves to be better known as
a draughtsman and a source of
thinking about The -development
of architecture.
This well arranged exhibition
shows his growth and training
as well as his final accomplish-
ments — all through drawings by
his own hand. By examining
his work the relevance of Neo-
return of the
neo-
Towards the end of the Bacchanal e — a Weinbrenner drawing from a
• classical fragment
Classicism to our architectural
dilemmas today becomes clear.
He believed, like the architects
of the Modern Movement, that
architecture is the art of
rational construction.
There are particular aspects
of Weinbrenner’s work that are
supremely relevant today. He
clearly understood the need for
archaeological knowledge' which
leads to an ability to isolate and
develop the elemental language
of architecture. The pure geo-
metry of the pyramid, the
obelisk, the column and the
rotunda is the architects’ idiom,
a medium of expression that can
be shared with the past and the
presentl
In much of his later work
Weinbrenner was trying to do
what some of the more serious
architects and teachers are
attempting to do today and that
is to establish a -basic archi-
tecture that has cultural roots
but is not dependent' on the
precise forms of the past. In a
remarkable drawing for a series
of uniform facades for the Lang
Strasse in Karlsruhe (never
executed) he shows that it is
possible to dissociate the
principles of proportion in
architecture from the classical
orders.
This takes us beyond Neo-
Classicism into a world that de
Chirico later made manifest.
For more than 25 .years
Weinbrenner put into practice
bis ideas in the centre of the
city of Karlsruhe. In the linked
areas of the Schloss Strasse
(today Karl-Wilhelm Strasse)
and the residential quarters, of
the city he realised an ensemble
of buildings that has a unity
of character equal to Helsinki
or Leningrad.
. The Mint, the former
Assembly Room, the Evangelical
Church and the whole of the
Marktplatz show the strength of
bis urban vision imposed upon
the existing Baroque structure
of the city. There are those
who sense a certain dryness in
Weinbrenner’s .work but these
drawings belie, it — they are
often remarkably sensitive.
On the first floor at the Archi-
tectural Association there is a
good display of French Grand
Prix engravings dating from
1774 and covering a period of
about 40 years. More in the
spirit of the Beaux Arts they
should be looked -at as exercises
intended to help the student
learn by copying.
In tbe Members Room, also
on the first floor of the AA.
there is a display of quite a
different character. Zaha
Hadid trained at the AA and
is now teaching there. She also
works on private commissions
and this show is dedicated to
the designs for a house for her
brother at 59, Eaton Place.
London. The . scheme for the
house is presented by a display
of paintings that are explosive
in character.
Architectural elements erupt
inside tfvhtly controlled urban
spaces. Nature is kept firmly at
bay and there is a chill intensity
about her vision that heiones to
the unknown future. Her show
should be seen, as it is a rare
ooportunity to see the work of
the younger influences that are
usine the A 4 as a base for their
gu*M*ilH activities.
Friedrich Weinbrenner is at
the Architectural Association
until June 26. the Fftzvrillfom
Museum in Cambridge fmm
July 13 to August 30. and the
Mackintosh School of Art, Glas-
gow from October L
Drama/Holland Festival
A Doll’s House/Th e Pit
Rosalind Carne
Adrian Noble's stirring pro-
duction will surely he lodged
in my memory for many years.
More than 100 have passed Since
Ibsen wrote his masterpiece
and it, still has the! power; to
shock, - albeit : titrougfi : thg jlain
of recognition rather than the
scandal of what he dared to say.
Any treatment of A Poll’s
House depends, ultimately, bn
its heroine, and Cheryl Campbell
is superb. Yer the doll cannot
afford to be superb alone and-
Stepben Moore lends the neces-
sary balance and intricacy to the
text as her husband. This Tor-
vale! is no dull booby. Unimagi-
native he may be, but he is also
a feeling man, with a glimmer
of stultified intelligence. He is
both oppressor and victim with-
in the very social system which
■ almost drives his wife to suicide,
and we can sense the moral and
emotional confusion behind his
brutal outburst in the penulti-
mate scene. We understand
wbat he meant to her, and when
she. leaves we read his pain,
head in his hands over the table
where they held the only real-
s«?lf-eongratitiatorv pedantry,
discussion, of their married. life.
Graphic images of this past
are conjured by the flurry of
events which expose the hypo-
crisy of their partnership. Nora’s
brilliance and fun verges on
hysteria, but Ms Campbell keeps
the mood swings in firm control.
She- is deeply sensual and can be
outrageously provocative, but
her strength lies in her ability
to" switch like lightning when
her partner's back is turned,
offering "us the depth of her
terror!-
Simon & Garfunkel/ Wembley
Antony Thorncroft
Controversial
premiere from
Pina Bausch
I have never seen anything
tike it. On Thursday night in
Amsterdam. Pina Bausch's
Dance Theatre of Wuppertal
presented the world premiere
of Water amid scenes of
euphoria, derision, confusion
and astonishment. The enormous
Theatre Carre, which is like a
municipal arena with Albert
Hall pretensions, was packed to
the seams with the city’s beauti-
ful people.
Some left, some booed, some
cheered. But after four hours of
what must be counted the most
extraordinary exercise in
audience-baiting since the hey-
day of the Living Theatre,
detractors and enthusiasts alike
rose to their feet to salute the
company.
Breathtaking insouciance is
the hallmark of Pina Bausch’s
work, allied to an indomitable
hist to expose the personalities
of her dancers. Walter opens
with a long sequence of going to
war, the company crossing the
-stage in the formation of spit-
fire aeroplanes, lying on the
floor, manipulating small paper
boats and swimming against
the . nationalistic ..tides of
Afghanistan, Belfast, Israel.
Hours later we watch a film of
a ch { id being born. On the way.
we have confessional interludes.
Michael Coveaey
frenzied scenes of eating and
copulation, bestial playfulness.
A consistent theme is that of
** performance ** somehow ob-
structing the process, of self-
revelation. This is expressed
most forcefully when Josephine
Ann Endicott. one of the two
Australian girls in the troupe,
breaks free to eat an apple and
declares that she can do any-
thing she wants. She does so
with a ludicrous exhibition cf
body stretching and tantrums.
Earlier, amid mounting cat-
calls. Arthur Rcsenfeld sings a
fragile parlour song. An In-
cipient riot in the audience is
immediately quelled by a
heavily veiled female vision
performing exquisite cart-
wheels around the periphery of
the arena. Many of these se-
quences are repeated, testing
the audience's patience before
Ms Pausch suddenly organises
something quite new to rivet
the attention. After the child-
birth, a concert is announced.
A recording of a Schubert
Impromptu is played with the
company sitting in silent at-
tendance in a semi-circle This
echoes an earlier tableau in
which a girl sits motionless
through a recording of Piafs
“La vie en rose.”
And yet all is forgiven and
forgotten the minute the com-
pany launches iuto one of those
wonderful, beautifully worked
out perpetual motion set-pieces
of interwoven, gliding chore-
ography and seductive hand
jiving.
WaUer does not provide as
much sensual pleasure as the
same company’s KontafetJiaf.
nor does it compete with the
proustian density of -1980. But
like all Pina Bausch’s work, iff
does transmit a clinical,
dangerous sense of theatrical
‘ experimentation. It challenges
an audience to define its notion.,,
of theatre and in so doing, of
course, unearths a few stunning",
possibilities of its own.
Equally exhilarating for me '
was Enrico IV performed by;»
La Compagnia del Colletivo 1 ,
from Parma in the Theater De*;i
Brakke Grand. This conflation
of Shakespeare's two history '*
plays is pan of a Shakespeare ■
Project I hope to document ']
more fully later in the year.-
The group has been together
for 15 years and finds a stunning ",
resonance in the conflict *
between anarchy and responsi-
bility that has quite evaded the-:
Royal Shakespeare Company in :
the Barbican. •>
Tbe piece comes across as a
rich comment on the evolution
in the real world of the headily *
irresponsible 1968 generation
here irresistibly personified in
the FaJstaff of Gigi DaU’Aglio. ■
One senior critic has com- .
plained that the RSC Prince Hal -
looks as if he has just come.,
off his motorbike. Well, motor-
bikes feature heavily in this .[
production, as do transistor
radios, leather jackets, juken
boxes and playing cards. Purists;-
may retire to the library and-,
ponder an awful paradox : the 2
Parma collective has done away
with directors.
Holloway’s ‘Nursery Rhymes’, Wigmore Hall
Cheryl Campbell
Obviously she is a born man-
ager. capable and realistic and
despite the cruelties of the
world she must face, we hold-
no fears on her departure. She
should do well in the school of'
life. It is her husband who has
lost the foundations of his exist-
ence. Her timing is perfect,
whether babbling to her friend
or in the slow, seductive pauses
as she shows off her silk stock-
ing to the unfortunate Dr Rank.
Rank himself, like all the
remaining characters is notably
low-key. John Franklyn-Robbins
Leonard Burr
plays him as one of those fami-
liar bores who cover their
disappointments by- .vicarious
indulgence in the lives . of
others. After this muted open-
ing, his declaration of love is
profoundly disturbing, both
because of what it must mean
to him and because of the
horror of all it suggests to Nora.
The doll’s house, for all the
frantic gaiety of its Christmas
festivities, is clearly an abode
where real love can never exist
The translation by Michael
Meyer is -smoothly colloquial
without missing a nuance.
You do not track out to
Wembley Stadium for a con-
cert; you go for an experience.
After the travail of getting
there; the hours of waiting for
the artists to appear on stage,
it is always a shock not to see
them. Are those tiny figures in
the far distance Paul Simon and
Art Garfunkel? Surely Simon is
not that small? But the sound
system is filtering through
Simon and Garfunkel songs and
the thousands packed around
the front of the stage are going
mad with enthusiasm, waving
their arms and whooping with
delight. This- must be it.
And once you have accepted
not seeing and stop worrying
about the sound quality the
whole thing becomes
tremendously worthwhile. Really
you are paying homage to one
of the greatest writers of popu-
lar songs of the past generation.
Paul Simon, and welcoming the
fact that after a decade he has
got back with best buddie Art
Garfunkel. he of the pained ex-
pression and the angelic high
voice.
.It is quite unnerving to sit for
almost two hours while classic
song follows classic song,
memorable not only for their
melody and lyrics, their variety
and the beautifully . blended
voices in performance, but their
relevance to the history of the
matters is grabbing again all the
personal favourites, for quite
rightly Simon and Garfunkel
played their, standards, with
hardly a new song in sight (why
has the creativity stopped ?).
There was a tremendous
ovation for “ Bridge over
troubled water,” but I was
struck by ** Me and Julio
“ America and Garfunkel’s
"Bright Eyes.” About all the
lack of posturing, the truth of
the lyrics for the writer, the
professionalism of the per-
formance, dispelled the bleak
surroundings. When, before the
long encore, they sang "The
Boxer ” and the lines “ after all
the changes we are more or less
the same ° a great roar of relief
came from the vast crowd.
While Simon and Garfunkel
play the past lives and we have
all survived.
BSO names new
chief conductor
The Western Orchestral
Society has announced that the
Russian-born conductor. Rudolf
Barshai will become the new
principal conductor and artistic
adviser of the Bournemouth
Symphony Orchestra in Septem-
ber. He suceeds Uri Segal who.
after two yearn in the post 4s
past 15 years or more. American . leaving to concentrate on his
history, the moods of its young work with the Phiiharmonia
people, can be better learned
through Simon’s songs than
from any academic treatise.
Perhaps Garfunkel’s voice has
dropped a shade, perhaps the
arrangements are funkier. What
Hungarica and Israel Chamber
Orchestra.
Mr Barshai made his debut
with the BSO in 1981 and his
first concerts as principal con-
ductor will be in October.
In three successive weekend
concerts, the Nash Ensemble
has compiled chamber music
programmes into which pre-
mieres are- being enticingly
slipped. Between a euphonious
but persistently undervita-Iized
Mozart Trio fir clarinet, viola,
and piano (K498) and the Beet-
hoven Septet, there was on
Saturday pieced the first public
performance of Robin Hollo-
wny’s Divertimento no. 3. sub-
titled “Nursery Rhymes.” This
is the shortened ve~<oon of a
work completed in 1977 and first
broadcast two years later— for
soprano ' (here. Rosemary
H’-dvl and wind quintet.
. Those dates may be signifi-
cant. In a series of recent com-
positions. this most civilized, of
the youneer British composers
has evinced a new-found mus-
cular strength of utterance to
counterbalance the appealing
Max Loppert
but sometimes rather soft
quality of earlier works; where-
as this Divertimento, though
brilliant in conception and
characteristically feticituous in
much of its detail, struck me as
decidely soft-centred. As the
subtitle indicates, it is a song
cycle of nursery rhyme settings
(words drawn from the Opies 1
Oxford Dictionary of Nursery
Rhymes i shaped and developed
into a full-scale chamber com-
position — at once diverting and
intricate, childlike in atmo-
sphere and sophisticated in
working-out.
The Overture announces with
lisht-hearted wit a ” Boys and
girls come out to play" motto;
the music, framing melodies
rrodirional in feeling rather
than In actual origin, pursues
contrasts between and com-
binations of solo voice and
instrumental statement with
signal virtuosity: and. as always*'
in Holloway, influences (not-.,
ably, to my ear. Mahler's Fourth
Symphony, the “ small " Stra-'j
vinskv. and Britten passim) are"
creatively admitted to.
What proves ultimately hard.;
to swallow is the sheer length,
of the piece (what must the
even lengthier original be
like?). In the elaborately spun*'
Finale, “ A gaping wide-;; -
mouthed waddling frog" is!
taken in full from verses one to
12; and a feeling sensed by the
listener earlier hardens here.'
into conviction, that Holloway’s
Strousrian expertise in devising
and developing chaoely forms •
has run on well beyond the--
f pi*-, hie limits of interest of the *
material or snhiect matter.
Ther» are moments of true
hnohr-eved sweetness in the
Divertimento; a whole experi-
ence of it left a sugary satiety. -
Buddy De Franco & Terry Gibbs/Ronnie Scott’s
Clarinettist Buddy de Franco
and vibraphonist Terry Gibbs,
both hugely experienced musi-
cans in a wide variety of set-
tings, have, rather surprisingly,
been appearing together for
only two j’ears. Their initial
joint : -appearance was, in fact,
in this country at Ronnie Scott's
in June 1980 and hearing them
last week back at Scott's (where
they remain until June 26)
prompts the listener to wonder
why it took so long for two
such- compatible players to get
together and present such
thoroughly entertaining jazz.
De Franco, whose technique
has been compared favourably
with Benny Goodman's, is a far
warmer and, harmonically, a
more adventurous improviser
than Goodman, also a less
romantic one. Gibbs, the extro-
vert of the duo, is a hard *
swinger In the Lionel Hampton
mould. The De Fran co/Gibbs
musical empathy is remarkable
Kevin Henriques
and firm proof that when two
virtuoso meet no ego bruising
occurs because of unashamed
musical respect.
Their -two personalities are
complementary. Neither tries
to upstage the other and the
the rest of your life?” was*
deeply searching.
Apart from the familiar stan-
dards some of Gibbs’ own com-
positions are included one of
which, “Samba Wazoo.’' is a
breakneck workout for both. De
perpetually gum-chewing Gibbs,' Franco flngerina fleetlv and so
whose speed on two maliets is
dazzling, is content during De
Franco solos to comp genttly
but meaningfully behind him.
The two-set programme is
intelligently varied. Gibbs or-
ganises ’ four - and eight bar
exchanges. chase choruses,
counterpoint passages, mid-tune
tempo changes and other
devices which ensure listener
interest never falters.
Both have solo features — on
opening night De Franco’s ver-
sion of Duke Ellington’s “AN
too soon” was movingly treated,
his round tone exuding the
song’s bittersweetness while
Gibbs’ exploration of Michel
Legrand’s “What are you doing
accurately and Gibhs moving at,
a furious lick which is a re-
minder that as a child he won a .
talent contest for nlaying “The.
Psht of the Bumble Bee” in-.
45 sepnnds! The two even risk
comparison with Benny Good--
man and L'nnei Fomntnn by .
playing “Airmail Special,” a
qiiActinnable choice.
The impressive first ni®M sets .
were enhanced in no small way-
by the — for once — outstand-
inelv sympathetic British •
rhvthm section. Alan Brans-
rnmbp on piano. Xennv BaWncV*
on bass and drummer Tony
Finsev provide the zestful,
swinring backing the two ‘
Americans respond to eagerly. 1
• ■ »
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CC 01-638 8891. Reservations .01-628
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kestra.' " Andre -----
Vladimir Ashkenazy Plano. Brahma:
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Svmpbonv No 10. Tpmor 6.30pm LSO
Brass Ensemble. SosalP: A Susan Suite
Satndoi Dhmrilmenlo for Brass. Pobtesv
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Byrd; tart ot Oxford * March. Ear’ of
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COLISEUM. 836 3161. CC 240 .! 5258.
Hotline CC 930 9 2 3 2. LAST 2 WEEKS
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HAYMARKET THEATRE ROYAL. 930
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5TER BARKWORTH In A COAT OF
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HAYMARKET • THEATRE ROYAL. 930
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KING'S HEAD. 226 1916. One 7. Show
8. MARRY ME* A- LITTLE songs by
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LONDON PALLADIUM. . 01-437 7373.
MICHAEL CRAWFORD and the entire
cast ot . KAKNUM ..CURRENTLY ON
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JONATHAN PRYCE. TALLEY’S FOLLY
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MAY FAHL S CC 829 3036. Mon-Thors
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Sub nightly at 7.30 om. Mat Wed a Sat
3 pul Credit eard Hotline 930 925"
VICTORIA PALACE. CC 01-834 1317.8.
01-826 4735-6. Ergs 7.30. Mats Wed
a Sat at 2.30. Limited number el good
seats avail this week. ELIZABETH
. TAYLOR in • THE LITTLE FOXES br
LILLIAN WELLMAN. Credit cards
accepted. Group sates 01-379 8061..
FINAL 12 PAYS.
WESTMINSTER. CC 834 0283. HANNAH
GORDON. GWEN WATFORD. PAUL
DANEMAN. JOHN CARSON In THE
JEWELLER'S SHOP by Pape John Paul
II. Ergs 7-4S. Map Wed a Sat 2 .30.
WHITEHALL. CC 930 6692-7765-
ROBERT POWELL as Ptiirto Marlow.
LEE MONTAGUE a Raymond. Chandler
In PRIVATE DICK. A celebration of
the 40’s detective movie. Rad price
prevs from June 26. Opens June 30.
MoivThur 8.0. Frl & Sat 6.15 & 8.45.
Ben Office row open.
WYNDHAM’S. /lr-cond. S 836 3028. CC
379 6565- Grp reductions 636 3962.
Men-Frl 7-20- Sal 4.30 & 8.00- Wed
mat 2.30. Record UK run ter any
Miller plav. Last 6 Weeks. COLIN
BLAKELY. ROSEMARY HARRIS In
ARTHUR MILLETS ALL MY SONS;
- Directed by Michael Blahemore.
YOUNG VIC STUDIO [Waterloo). 928
‘6363. from T omgrniw at 7.30. SOME
. ENCHANTED EVENING by C P.
TAYLOR. Ail sntfc £1.50.
F.T. CROSSWORD
PUZZLE No. 4,902
ACROSS
I Show -stopping number (6)
4 Case of tbe non-striking poet
( 8 ) . ..
9 Hurry up. progress (4, 2)
10 Remove hair in trouble (81
12 Did slope somehow become
unbalanced? (8)
13 -Told 'to play stand-off in
one’s own' interests (6)
15 You '• . old-fashioned artist
returning for a period (4)
16 Writer depressed by censor
(4.6)
19 December 25 is modern
(7,3)
20 Influence in force (4)
23 Stylish set you begin (6)’
25 Sit down but not' necessarily
in church (4, 1, fl)
27 Disgraceful jingoistic bomb-
bast (8);
28 94ums hasten to club (6)
29 Key to puzzle offered by cord
■—do we switch? (4, 4)
30 Footballer-wbo doesn’t go off
( 6 )
.DOWN
1 Capacity of uhiveraty depart-
ment (7) ;
2 Team panel, anyway a panel
3 Chance to. watch TV <4, 2) ;
5: Adamson . raised to * make
trouble (4)
6 Yorkshire must be severely
beaten (8)
7 Scene of action found in
square naturally (5)
8 Quito enough on one’s piate
(7)
11 One enters immovable
property in all truth (7)
14 Escape? Don’t be silly (7) '
17 Meat far idiot to cut (5, 41
15 Material for pallet winning
to flower (8)
19 Fight shy of sea area (7)
21 Disreputable outfit used in
driving (3, 4)
22 Composed appointment in
south-east (6)
24 A conflict over key prize (5)
26 Single-minded expert ( 4 )
The solution to last Saturday’s
prize puzzle will be published
with names of winners wrf
Saturday.
7
• 12 .
Financial Moiidsty i tme^21vl982j.
FINANCIALTIMES
BRACKEN HOUSE, CANNON STREET, LONDON EC4P 4BY
■Teieprams: Finantimo, London PS4. Telex: 8954871
Telephone: 01-248 8000 '
Monday June 21 1 982
The Militant
report
THE REPORT on the Militant
Tendency within the British
Labour Party turns out to be a
brief, tactful document and in
many ways a statement of what
was already known.
Clause IX Section (3) of the
Party's Constitution says :
“Political organisations not
affiliated to or associated under
a National Agreement with the
Party on January 1 1946, having
their own Programme, Prin-
ciples and Policy for distinctive
and separate propaganda, or
possessing Branches in the Con-
stituencies or engaged in the
promotion of Parliamentary or
Local Government Candida-
tures. or owing allegiance to any
political organisation situated
abroad, shall be ineligible for
affiliation to the Party."
The Militant Tendency has
long been thought to be in
breach of that clause ■ The
latest report, commissioned by
the Party's Natiirial Executive
Comnrirree. confirms that belief,
though the evidence is not to be
published, or at least not imme-
diately.
Conflict
The question for the Labour
Party and especially for Mr
Michael Foot, the Party leader,
is what to do about it The
report has thqtuerit of offering
an initially discreet approach.
11 states that the Militant
Tendency is " in conflict with ”
the section of the Party Consti-
tution quoted above and it
recommends that “any group
found to be in breach of these
rules should be given a period
of not more than three months
in which to put an end to such
infringements.” In other words,
the Militant Tendency must
either disband, or funda-
mentally alter its arrangements,
by about the end of September
when, as it happens. Labour
will be holding its annual con-
ference. There seems little
douht that Mr Foot and a
majority of the NEC — though
perhaps a small one — will
accept this recommendation.
How the Militant Tendency
and some of its covert sup-
riers will react is. of course,
ess clear. The Tendency so far
has offered only a few token
concessions and another far left
Labour organisation, the Cam-
paign for Labour Party
Democracy — sometimes associ-
ated with Mr Tony Benn, seems
to be threatening resistance to
even the modest reforms pro-
posed in the report
Here the report itself has
some pertinent observations. It
is a question of perspective. The
Militant Tendency is un-
IS
doubtedly an infikrationist
group which has quite different
aims, fnim the bulk of the
Labour Party. Mr Foot
described it some time ago as a
“pestilential nuisance.” It has
clearly made recent Labour
Party conferences mare difficult
and— to the outside observer at
least — more unattractive by the
way It has concentrated, on
mobilising its forces in support
of particular resolutions. Its
main objective seems to have
been to reform the Party
organisation in such a way as
to be able to control policy
later: hence the stress on
matters like the method of elec-
ting the Party leader and who
has the final say in the wording
of the Party manifesto.
Yet it is a large mental leap
from there to go on to say that
the decline of popular support
for the Labour Party is due
entirely to the rise of. the
Militant Tendency. As the
report pou- rifts out many mem-
bers of t he Party share some
of the Tendency's aims, but are
in no way subscribers to the
organisation. Still more to the
point is the report’s remark
that the Tendency “ cat exer-
cise an influence but of all
proportion to. their numbers
simply because many of our
affiliated organisations do not
take up their full delegation
entitlement. In particular, if
affiliated trade unions exercised
their full entitlement to delega-
tion the influence of the Mili-
tants would - be negligible ,at
constituency JeveL"
Decline
That is the heart of the
matter. The Labour Party is 'in
decline but the main evidence
of the decline is that it Is losing
its most natural and traditional
supporters. That support is
most likely to have been lost
because the Party has ladled to
up-date its policies to changing
social conditions and failed to
maintain its organisation in the
country.
The inroads made by the
Militant Tendency are
symptom rather than a cause
Mr Foot will have to fight the
Tendency, of course: indeed has
no alternative but to do so. Yet
the report is subtle in implying
that it should not be a fight for
its own sake. The principal aim
must be to win back those sup-
porters who only a few years
ago would have voted Labour
almost as an act of nature
because they believed it was the
party of fairness and greater
equality. The formation of the
Social Democratic Party has
made the task more difficult, but
not impossible.
FRANCE AFTER DEVALUATION
By David Housego in Paris ,
' V;'; '
ccnP HE
1 °L
HE -ONLY' chance now
saving the. Socialist
experience "■ was the
grim response of ode senior
party official to the austerity
measures just announced by the
French Government.:.
For the Socialist hierarchy
(not to mention the Commu-
nists) it has been a' bitter pill
to find that the hopes of 12
months ago of ' charting an
“alternative" economic strategy
towards higher growth and full
employment have been so
humiliatingly swallowed up by
a second devaluation, expendi-
ture -cuts and a prices and wages
freeze.
- Among Socialist -deputies in
the National Assembly, there is
immense disgrnntlemeht at
being insufficiently, consulted
and that the Government should
have so mishandled both the
management of the economy
and the presentation of
the measures. But in the
last resort they are ready
to accept the package because
the other, options are far .
more unpalatable.
There Are no advocates within
the Government for anti-infla-
tionary policies requiring such
tight fiscal and monetary
restraint that they would bite
into public sector investment
and drive unemployment up to
3m. That was -the recipe of
M Raymond Barre, the former
Prime Minister, and President
Mitterrand would have faced a
revolt if be ‘ bad proposed it
This' administration still
believes it can
down and keep
Thp ftfhpr (Ariaiic alternative
>;^ouId;4et pu&$e : *>rfi4affo4ist
in any
■r.caseL .ihe-:? French -.dash for
• .crumbjifed,'.,v. Real
L'jGifeafi - quarter.
.Stiil - saddled
^itb .to-. ; jnflatioiL- rate- .■ three
-.times, #iat ■of.West'rGermany
vana., .sparing tirade- .and' budget
• •: r ; The-; Ltfiffictriffes; . >ahead id
V. jftieDc^tihg both; touring down
"i loflsbojj employ.
.Thi
- - -.Government: intends. . the wages
-and. priceyireeze a& shoek treat-
.jrient tp/curb faSationary ■ espee-
'.tatl^ns ,-rthat L.ware/ carrying
frame's raflatib^. aiYtonnal
the
; - first ‘half.- Ev£ll osb/ thfe -practical
^d^coltids of' enforcing strict
”y ■pnce_controls pver the summer
: holiday period.— when margins
'• normally ; sneak - - up . ' a re
• immepso. i 'r t
•.i Unions have no .-stomach, for
theless -of purchasi bg- paw erin-
volved In -j the wages, freeze
( when same .prise* will still be
going up). Maby etxipl&yers also
; .have- no- Wlsffi to . stir tijL discon-
‘ tent % - WitliSfawirig - wage in-
- ’^creaaei premised tor Jifly • ind
i notified; to' workers^ • •'
■ v " : Tt- seems 1 . ^almost inevitable
__ . that comparries. whose . profit
PHI Tnaj^ns 1 are- already depressed,
J •> wili cut bjtcfc investment In the
. face - of the uncertainties' of a '
_ ' .• ■.-•• ■ "freeze- oh prices and^tfte-distri.
2flS6). Thus, though the Gov- standards that now stares France even more strongly to. a drop in increasingly pressing advice : on butidii of dividends. ■ The much
eminent is in for a rough patch in the Face comes from the Com- living standards. ; . this (as on a number. of other,- -tar per Vyolurae- ' of' subsidised
over the short term, the hope munists, and the Communist-led The- luxurious splendour that issues) went, unheeded, 1 damage Credits the; Government has
is thal France wfJi emerge from' CGT union. “There is no surrounded the Versailles, eco-. ing his iuteraationil credibility, made, available ^does- not offer a
the' recession with a: more .. question of austerity,”. Com- nomic. summit -was ,-.a bad as the - guardian; of : France’s', compensating .L.- incentive.
1 Among-.: therid fo»W r i# fte
thxsv&me the - S^'sKst-Party.- thereliictznrt
austerity leaks from 'West Germany that of companies te< invest serves ta
France might. leave -the EM S and . strengthen the . case tor greater •
that MiDeloisi WouM resign.- ^ ; Stete jntervto tkm In '- the ‘
.. It is-now'cirer’'tittt-there'.-wxs ;*cphomy.. . V
a 1 sharp . -tussel -m - the G oven*- Iff Uelars^has set j his sights
meat ' over ' whether France on reducing the budeet.deftc'*
'should withdraw, from the EMS. from 3 per cent of GNP.to 2-2 1
of av hsii «r*d ' M *** t0 like 31 ^ rtnt *» Si* 1 yeaxi
/official say: • M Michel >ft- retnams difficult to see how
reserves ana - Minister of the Plan, ' the Goverriraent will hold- th*
■' had long . faydiired 'France’s' budget deficit to ^Fr 120m next
adopting-. ;-4' floating ^ -exchange^ ^ year ^fter FFr X07m thf«i year
rate. as : gSVfng the Government -.fa ; rediictioti in. real 'terins)
more rown : for manoeuvre. . espert«Uy- as the President -has
Other- supporters Included M puMfcl^ .foregim^ . addition? i
Chevehement. Minfeter , for taxatiorL But- the toueher bud.-
Research; and.M Anvcet LePorS, getary policy willenablc France
tbe'Co^lui^''Miaikter.for: the .to borrow more easily abroad.
Civil Setrice^. bath -.of-- whom . -"No 'measures have -been, an-
seeraedf_-^vnii«^g '^o accept :tKe'. nounced 1 for containing mone-
tary^ growth: 1 The. Ministry of *
Finance is stitifcmg- tot its tan-
, gets of ^H34- pei- cent -growth
How India
earns aid
A CONSORTIUM of
governments concerned with aid
to India held an annual meeting
in Paris last week and agreed
to provide the country with an
encouraging amount of aid over
the coming year. The disburse-
ments of about Sl./bn expected
to result before next year’s
meeting will imply the real
increase of about 5 per cent in
the flow of concessional finance
which the country has been
hoping for.
The outcome is heartening
because, at a time of recession
and widespread budgetary
stringency, it is right that the
World Bank, the International
Monetary Fund and the govern-
ments of the industrialised
countries should co-ordinate
their efforts and preserve a -
reasonable flow of funds to a
sub-continent with such un-
developed economic potential.
Caution
The argument is strengthened
now that India has become,
somewhat less inward-looking
and restrictive in its economic
policy and has — under the
anxious eye of the IMF, which
has been criticised for making
too large and too lax a loan to
India — imposed a more cautious
fiscal and monetary manage-
ment .
The annual aid- consortium
meeting was established in .1957
as a result of a deterioration in
India's trade balance, and just
such a deterioration threatens
again today. The fall in com-
modity prices and the sustained
cost of imported oil has resulted
in a marked worsening of
India’s terms of trade. In the
year to April 1982 India’s cur-
rent deficit widened from $3.2bn
to $4.3bn. The IMF and the
World Bank both made it clear
in Paris that India was pur-
suing a programme of economic
changes more important and
promising than any in the past
decade and that balance of pay-
ment difficulties should not.be
allowed to scare India .back
towards protectionism and stun-
ted growth.
Poverty
Scandinavian countries at the
Paris meeting objected to this
macro-economic argument for
aid: it lost sight, they argued,
of the abject poverty which is
so widespread in India and
which should be .rhe fact most
aid givers focus upon. Poverty
is indeed a moral:. imperative
behind aid. But it is. important
to remember that, particularly
in an economy as vast as India's;
the significance of aid, and the
criteria by which it is judged
effective, relate, much more to
the balance of payments . than
they do to the scale and the
direction of investment within
the whole economy. Aid . and
World Bank programmes can
have a big impact on the former,
but can do very littie to alter
the latter.
Viewed from this perspective
• the desire of most donor coun-
tries to couple aid with trade
looks rather less counrer-
producrive. But the case against
aid via grandiose- industrial
projects, more appropriate to
the vendor’s unemployment
problem than to the recipient’s
economic development, still
stands. There is, moreover,
some tendency for industrialised
countries to overemphasise
India's new attractions rather
in the way they went overboard
for China during the 1970s.
Restrictions
The quid pro quo for last
week’s concerted action to boost
aid to India must be continuing
momentum in the Government’s
efforts to revitalise business
conditions inside India. Feb-
ruary saw an encouraging set of
measures designed to free the
import of capital equipment and
rhus Increase the efficiency with
which Indian goods cam be pro-,
duoed for export. It was
followed in April by a lifting of
restrictions orf the production
capacity of foreign companies
and by the larger Indian groups.
But tiie latter measures prpved
a disappointment: busmesanen
found that the new concessions
to expand capacity were hedged
about with conditions and sub-
ject to elaborate registration
procedures. The old habits
evidently die hard and the
Indian Government’s apparent
willingness to change- its atti-
tude to industry cannot yet be
taken for granted.
Ministers Jacques Defers (left) and Michel Roeard: a sharp tussle' over EMS withdrawal
bring nflation muscular industrial ' capacity munist leaders have been say- political blunder -coming - as it public finances.,
employment up. than most oJf her competitors. ing. But the Socialists did' only '.a .week before' -the Indicative- of
For the radicals within the believe that they have -announcement of ' — * — **“’'■ '• “
winning back in machine tools, a Minister said with, a grin this
electronics; furniture, toys and week. ■ - .
other industries what has been For the Conrinunists are
lost to imports. caught in the trap that - they
To achieve these .ambitious vowed they wnuld. always avoid
lone-term eoals. many. Socialist .-^that of being members of a
militants champion even greater ■
risour nov.' than .the Govern-
ment is. prepared 'fori' The left
has its own tradition of
austerity unconnected with the
“ Rieht wing ” stabilisation mea- :
sures of M Barre in 1976 that
had the unions demonstrating
on the streets. It was M Pierre
Mendes-France. (the former
th-ime Minister and now the’.
“conscience of the left”) who, .
unsuccessfully tried to persuade ;
now going on
leading up to
the devaluation, it becomes
increasingly clear that M . Mit-
terrand's failure to take-
decisions - earlier cost Frandie
dear In terms
foreign exchange
System (EMS). thus retaining
the Government's freedom to
pursue its own economic policy
without the constraints of
exchange rate discipline. This
was under consideration in the
Cabinet and remains a possi-
bility should there be a further
devaluation.
In the end M Mitterrand had
no stomach for the .even larger
devaluation of the franc that
this would have - entailed and
the retreat of France behind
protectionist ■ barriers that
would have put an end to
M Mitterrand’s hopes of
enlarged European co-opera-
tion.
As against these negative General d“ Gaulle after the war .... - ... . . ., , — . . —
factors, the consolation for t0 cut back on consumption so left-wing coalition imposing un- costly borrowing; tiJ3C- has now :;\M- MitterrarttPS instiqCts.were for the year, though the money
the Socialists is that, they hope as tn leave more resources free popular measures on their sup- to be repaid to' .thti Germans . to stick, wltii tiw EMS as ; a major- supply has- been; expanding sig-
for investment. Tn milt rmw however out of dwaftW Prencb-. francs. -Plank of European ‘re-operation- nifiomtly - faster ' recently.
The difficulties ahead in
attempting both to bring down
; inflation and sustains
. employment are
r go itValOhaTvpolicy..; •
to have preserved their plans
for a massive investment pro-
gramme- to restructure and
modernise French industry
using the nationalised sector
as the launching- pad. The
major accusation that they
make against M Barre (and
even more against Mrs Thatcher
But in calling for sacrifices
of the
contradio-
today is totally, unm tne austerity paciotge anarrs. .. - - 1 - ' ■ v^ttoClunent" to thd:EMS,_ Tpe tlom Mrtthni the GovOnmiefit's
different from that of 1976 M Mitterrand’s personal The danger signals / of. (u ■ final decision to d^lue ; .and : potic^ -reunLih- huniereus.' It is
when M Barre preached . popularity seemed to have widening' trade.' deficit, : ari. Jnfla*.. fehMln' -within. tbe'EM?; war still hard to see-howFrance con
austerity. It 'comes on escaped the electoral setbacks tion rate ;weil - above -4hat.v.af- takect.at^ ^Versailles where^ ^ the snatch- Germany’s inflation rate
in Britain) is of having pre- the heels of a year in which the Government has received — France's cwnperltorS. of .spiral- French pressure for gTeater of 4^ per cent a year (France
sided over the steady erosion France has seen the working most notably the unexpectedly -ling budget expenditures and - international monetary co-opera- never - -did./ ander' ..former
n r .« W eefc cut; wages rise (hourly large reverse in the cantonal mounting: . pressures' oh . the , .-'tiiia' ^'eloSed the^ '.door to pimjiig President' Giscard d’Estaing)
of investment and research in
industry, thus leaving France’s
industrial fabric much
weakened.
At the Elysee the calcula-
tion is that the investment to
be made in the near future will
start to bear fruit by 198WJ6
(Jn time, ii is hoped, for the
crucial legislative elections in
elections in March. He h/s
benefited from the national role
of the Presidency under the 5th
Republic to slay above the fray.
But « would be surprising if his
popularity did not now slip.
a further
franc, had been 4 flashing, since out of the EMS. ;
early in- the .year.* M- Jacques 1 . AV-the ^tae. .teme -M-Mitt€b
Deiors, the -PtMnre - .Minister,'' -rand's acceptance of the goal
warned the President in Feb- r-. of greater .convergence of
ruary that thd deflationary economic- policies arid bls-
policies being pursued, in the pressure for a tougher wording
Most unions resist. this logic. The French take badly to two U.S. and elsewhere -had ; left, ire the final. Versailles com-
Potentially the most dangerous devaluations within ■ eight France's expansionary strategy, munique on fiscal restraint were -There is no guarantee, that the
opposition to the drop in living months and will probably react perilously out of Step. His . a tacit admission that France answer will be : th* same.
earninss went up IS per cent in
the first quarter), holidays
lengthened and social security
nayments increased. No other
western nation has lived nu* the
recession In such srlorinus style.
and thus ...avoid
devaluation. : .
- Sho^ -present poticies fail
and the franc again come under
pressure, the question of
France’s remaining in: the EMS
will be posed more dramatically.
Men & Matters
Master minds
Apropos the Denning Succession
Stakes— otherwise known as the
40,000 Guineas (that being
approximately the annual prize
money for the winner) — I'm
reminded of the girl who’d
danced with a man, who'd
danced with a - girl, who'd
danced with the Prince of
Wales.”
I’ve talked to a man, who'd
talked to a glri, -who’d talked
10 an Appeal .Court judge, who
reportedly ' said that the con-
sensus among his fellow Lords
Justices was that the next
Master of. the Rolls should be-
either Lord Justice TempJeman
or Lord Justice Oliver.
My man at the . High Court
professes himsel f u ndismayed
by this inside information. He
stoutly avers that Lord Justice
Donaldson . is still in with a
good chance. . ’
However, the latest intelli-
gence has it that a dark horse
has appeared among the runners
—none other than Sir John
Arnold, President of the Family
Division and one of the trium-
virate of tbp.judges, along with"
the MR and .the Lord Chief
Justice.
Given that he 1 outranks his
rivals he', must be regarded .as
a .very. Serious contender. ta ‘
Meanwhile, there is a whisper
h the Inns of .Court that Lord
Bridge, a fancied runner ‘from
the -House, of Lords, is coming
up fast on the rails and a casual
visitor to the -Lords last, week
might .have been excused for
thinking that Bridge was engag-
ing in a bit of. subtle politicking
at the expense of arrival. ;
He and two other Law Lords
were hearing an application for
leave to -appeal against .a: judg-
ment of Lord . Justice
Templeman.
Bridge suggested, that Leo) in
Price. QC. for the applicant, was
arguing that the Templeman
judgment was " all rubbish.” • '
Price agreed that “your lord-
v
ships’s formulation encapsulates
my argument with elegance and
punch.”
To be fair to all concerned, I
should record that the applica-
tion failed, and the Templeman
judgment, rubbish, or not,
stands.
Plugging away
The modern equivalent of tak-
ing coals to Newcastle is, I sup-
pose. taking British high tech-
nology to Japan. The latest to
attempt such a herculean task
Is Norman Lament, Minister of
State for Industry.
On a recent visit to Japan
with a party of British business-
men, he sought to take advant-
age of the reduction in Jap-
anese tariffs by emphasising
the attractions of UK goods.
Lamonr presented some, of his
hosts— the .heads of leading
local banks and- industrial com-
panies as well as of Miti. The
international trade and juduV
try min i stry— wi th th e best sell-
ing Sinclair , ZKSlV claimed to
be .the cheapest small computer
oh! the . market. Selling for £70
in the UK. half a million have
so far been bought worldwide.
According to Lamont the
hosts wqre amused and pleased
with having British fechnoloey
plugged : in . their offices.- But
whether it. hints Into a fashion
remains to be seen.
Ranald’s return
Eleven 'years after retiring
from the City of London with a
£500.000 nest-egg at the- age of
30, Charles- Ranald has returned
to offer a million $10 shares in
Forerfund, a managed- currency
fund based' in Bermuda. .
■ Ranald made bis. name, and
rrioney, .during the 1960s when
he built up the Castle Britannia
group, of unit ..trusts which: by
the time he sold .'out. to. 1 Jesse l
Securities, was handling nearly
£2 Dm for over 50,000 investors.
Concluding that unit trusts
ha$J become “a. big man’s
sport, ’’ Ranald departed for
Monte Carlo with plans to
indulge -his passion for flying by
running a shuttle service
around the South of France.
-• “ That .didn’t work out, ’’ he
says — though for a time he ran
an. air-taxi business between the
French Riviera and .Geneva and
Zurich.
Ranald turned , to various
other business enterprises, but
tells me he began to take a
serious interest in currency
movements .after “ catching a
cold ” in the Swiss property
market in 1974 when sterling
fell against the Swiss franc.
As president and chairman of
Forexfund; he is now back in
the City to take advantage of
the freedom British investors
have gained from the lifting. of '
exchange controls.
But ft is just as well he stHi' -
loves flying. For while the fund :
is' based in Bermuda and invest- <
ment advisers Drayton 'Montague-
in London, the subiniptfoti: anff >
redemption side of fhe.Jjupine.ss
. wtn be »r>nrtJ«d from 'fiberjiseyl
and RamH’s home will fentem
in Monte Carlo. " .
the local shipping industry.' .
In T97Q it- extended its opera-
tions 1 into EuroDe and the Far
East and has since grown -toto
the world's largest private
marine weatherjaervi.ee.- -
Its main business is-pretriding
shipping companies with routes
rhat will avoid bad weather at
sea — thus ensuring the fastest,
safest' and most economical pas-
sages. But, as at Aberdeen, it
also services the off-shore oil
and gas industry with forecasts
and undertakes weather-related
engineering studies.' : ;'*• '■ .
. Linked to Palo 'Alto’s' com-
puter, the Ocoanroutea offices
have access tn- a 1 vast ’ mter-
anal ^either observation
network including satellites,
government weother ■ stations,
and ■ fhe co-onerarivfe : crews of
merchant ships at sea-' : ’ r - -
Weather eye
Wirftfn days of The Falklaitds
t«ik force leaving Portsmouth,
the Financial Times was provid- ■
. iog its readers with daily fore-
casts of the weather in the South.
Atlantic— in spite of the fact
that the Met Office, on orders
from its paymasters at the
Ministry .of Defence, was
politely refusing all requests for
information.
'For that service,' readers can
•thank a. company .called Ocean-
routed ■ based .in the * United
States- but with UK offices, in
Gravesend, Kent and Aberdeen,
.Now part of the. Swire ship-
ping group,. Ocean routes was set
mi by rfieteorologist Howard
Kaster in Palp .Alto on the Call-
form an coast 30 years. -ago. to
provide weather forecaste for
;• ' j'
liberty bill
'TSj.e United States is- faced with'
1 another $ 100m bill for; presertr-
,1fag liberty. Thlttiine H .is the
96-yea r-fltd Statue of Liberty In
VNew/ york Bay that needs. 'Ur-
gent safe-guarding.. Its -freen-''
ringed- eoppetf skin- and- ifon in-
■ frastructure- ' - . are' . - weakening
With age. : ■' *. ■■ r-
: *" Chiysler Corporation chair-
ipan:.t6fc' lacocca Is heading .a
fund-raising, comm is 'non -ap-.
pointed by President- T v**nii:td
raise the money needed to re-,
store the 305ft statue arid' 1
create a. iriemorial to America's
immigrants on nearby -Ellis
Island.
• lacocca. whose parents 1 were
among the 12m immigrants who
landed at Ellis Island between
1892 and 1954, aims to- ‘finish
the work in time for centennial :
celebrations in 1986. . - . '
Endless trouble .
Hypochondria — an infinite cap-
acity for taking. pains.-
'. ■ 1 • .1 ■ ■ / •
Observer
andyou have a second opinion,
on every creditrisk-with millions
of money tobackit
Ifeur whole financial scene is
XllOre prcdict r tlc. WdamwinoreaboutiheGDaKl
. No-Go Areas of trade and ocxnmirce'tlmnanyptie else
. ' jn country and.so we should. We-have been in tfie ciedft-
. as ®^ sn ^^l ; msTn^f(^60yeare,'nTOww^ifyeRi’reinsure4
^h. us, w p can g ive quick, auihoritfltjve answers when your.
'■'r. • crato man^emriGsupand says, "Shafl I take emsb-and-so?
• Will you cowwTneff Ido?". .
And^ ihe answer wegiveis not just an^ dpiroon: 5s ah
underwritten judgement. Weback (twithaurown money !
We toke thehig risk.'Ybudoift. ■ j = -
Ti^lhdeninity Gteditliisuia^
taI^(heimoutQfri®dit
. _ Please idlrae wtaj kind of iervfcejwi eouk(aflifcr|
.toniybwinesi. . .- .- . ■;
■ FT/2XWQ. ■ j-
y- gadtion'.'- •' : 'i : , ' - .-'j'y _Vv;-
Jteme nfbigiwsy' , .. v--'
— "n'r '.t * 1 .
■&ndia Me Charles McCanan,.- — l;‘
Marketing Manager VREEPOST Address
jtno stamp required), - . . r-
^i^elnqsniHiypfc. • .
I&dc indemnity Houbc, • .' j
. 12-34 Great Eastern Sxubl/-
I lon£fac 6 C 2 B 2 R. '
i.
7 yephoneOI-? 39 . 43 if» ; v . vj - - '■ • f i
financial Times Monday June 21
*1 1
FINANCIAL TIMES
Monday June 21, 1982
Hong Kong: the Chinese way
•Me
U
CONTENTS
Outstanding improvements in social conditions and
rapid economic growth are the legacy which Sir Murray MacLehose
left behind on his retirement as Hong Kong’s Governor earlier
this year. The issue which will dominate the term of his successor.
Sir Edward Yo.ude will be the colony’s status vis-a-vis China
as the expiry of the lease on tjie New Territories draws closer
Tasks for th e Governor
Relations with China:
Towards 1997
Profile: David Li
Chinese re-exports
Peking’s ventures
Special Economic Zones
Profile: Lord Kadoorie
Finance:
Banking
VI
Other financial services
Profile: Hongkong and
VH
Shanghai Banking
Corporation
VII
Bank of China
VII
Stock markets:
Unification prospects
Likely trends
VTII
Commodity markets
X
Company profiles:
Winsor Industrial
XI
Corporation
-Tar dine. Matheson
Hutchison Whampoa
Swire Group
Property:
Building boom slows
XII
. n Profiles:
Hongkong Land XII
ni Hang Lung XII
in Housing XT
IV Carrion Investment XT
IV “ ' : : —
Mass Transit Railway XI
IV Trade/Industry:
— When small is good XV
Textiles XV!
VI Multi-fibre agreement XVI
^ Foreign investment XVII
Support organisations XVTI
,11 Shipping xu
m Electronics XX
Watchmakers XN
HI Society:
Education XXI
_ Population XXI
^ Government: XXII
JCI Profiles: John Bemridge
Sir Philip Had don -Cave
Communications: port and
airport XXI I
Businessman’s Guide XXIII
— Editorial production: Arthur
Dawson
. 1 .
V %
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• ; .
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m:rnm *>,
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wiii-ivi
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to succeed .
Hong Kong is indisputably a world centre of finance
commerce and communicatioiis. For all that, it can be a far ay
from the usual business environment. But we can make it easier
for you*. , 1
Hutchison has grown with Hong Kong, becoming one of
its largest companies with assets in excess of US$960 million, a
turnover of US$600 million and recurring profits after tax in 1981
of US$140 million.
. Hutchison is contmuingto invest in the future of Hong
Kong through its active involvement in the key growth areas of
Hong. Kong’s economy, such as property development; container-
Hutchison is ideally positioned to help you partierpatein '
Hong Kong’s excelled; future growth prospects. We are riot
suggesting that we can eliminate all the risks that go with involve- ‘
menf in Hong Kong’s effervescent economy. We will however be
able to help you correctly identify your opportunities and quickly
resolve the inevitable problems. Without leaving anything to
chance.
If you want to know more about us, simply send us a
business card and we’ll send you a copy of our 1981 Annual
Rqxirt. The figures speak for themselves.
In an age-old ritual, the cup of • • . ’ . . • .
Chinese fortune sticks is gently shaken
until one stick detaches itself from the rest.
The message that it bears is a clue to •
future prospects. < ' " ... • -
£
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Financial Times Monday June 21 19S?,. ; .
HONG KONG II
Hong Kong’s future status with China will dominate the issues facing the new Governor, says Robert Cottrell-.
An unflagging belief in the profit motive pays off
OF THE MANY tributes paid lo peritv could be built and in
Sir Murray MaeLehose on his which the future could be
retirement' after more than a studied contructively
decade as Governor of Hong than just hopefully.
Kong, one of the most concise Sir Murray MaeLehose, soon
rather
came From Mr .John Bremridge. after his arrival as Governor,
the Financial Secretary, in his decided that Hong Kong's pres-
February budget speech.
sing need was for an accelerated
LoWu
ShaTaui
" In these years of your public housing programme. In
governorship,’* said Mr Brem- the last len years that pro-
ridse. “ Hong Kong has ex-
perienced remarkable growth,
often in the face of general
gramme has yielded 31 new
housing estates, so that now
around 40 per cent of Hong
Kane's nonulation lives in
adversity. In real terms our Kong’s population lives in
total exports have increased by accommodation provided or sub-
182 per cent, our GDP by 162
per cent and our per capita
sidised by the government.
If the new towns with their
-Yuen Long
TaiP?
GDP by 106 per cent despite a hundreds of thousands of in-
population increase of l.lm. We habitants are the most dramatic
still have no serious unemploy- legacy of the MaeLehose years,
ment problem ... in housing, there are others too. The inde-
TsuenWan
m cum
health. education.
pendent Commission against
welfare, recreation, law and Corruption was created, answer-
order, transport and many a bie to the Governor and
other fields these past ten years charged
have seen outstanding improve- organised corruption. Building
ment in the living standards of work above ground was cont-
our people. What has been plemented underground, as the
done — which all can see — Mass Transit Railway (MTR)
stands as your monument.” snaked its way beneath
The bald figures within that Kowioon. Backed by HK$ 4.7bn
— — of Government equity capital,
the MTR is now two-thirds com-
It BBS until IlOW plete and carries lm passengers
Staved off the ever >’ working day.
Mirr onf rproccimi The Advisory Committee on
current recession Diversification (ACD), was
■■ another manifestation of the
lapidary paragraph summarise MaeLehose years, a ■ high-
It has until now
staved off the
current recession
a~^n t
pagW
\ %< r '
A *’•
\
t .ShjiTfn
FERRY ROUTES
Kowtamj
mEK
China
the remarkable growth achieved Powered _ think-tank
by Hong Kocg°over ten years reported in 1979 an the poten-
dLring which the global ‘i? 1 , f ° r economic growth and I
economy suffered two reees- f ^ e infrastructure necessary, to 1 .
sions. one in the aftermath of ^PPOri it. Hong Kongs tradi-
the oil shock and the 'second at J 10 ]??, manufacturing base, quick to point out, laisstfs-jaire.
the turn of the decade — from replies and garments, had be- The Governmen-t raises taxes,
which the world has yet fully come in one sense too success- builds roads and houses,
to recover. fu '- educates and provides limited
Hong Kong too staggered ? ncI . tfie AC> . looked- to a social security. What it strives
through 1974 and 1975, achiev- broader economic base. not t0 <j 0 | s intervene in the
inz onlv marginal real GDP “ Infrastructure " is a word economic activities of the
\mm
Island
which the world has yet fully * n
to recover. ful ;
Hong Kong too staggered 3ncI . tnc
through 1974 and 1975, achiev- broader
ing only marginal real GDP " Infra
growth. But in 1976 it leapt into much fa
recovery, making up the hack- Govemrr
log with real GDP growth of provides
houses.
almost 19 per cent. It has until sion for general social and in- international
r. ft rlnclrinl nrni-icinnc ]» — .
now managed to stave off the dusfrial provisions as distinct which it can neither predict nor
effects of the current recession.
effects of the current recession, from specific subsidies to control and which should not
with real GDP growth last year sectors of industry or particular be frustrated.'
of 10 per cent, though this companies. Infrastructure can Positive non-interventionism
year's official forecast of S per he anything from an emphasis has historically proved a good
cent now looks like a remark-
able tough target to meet
Yet the seventies were not
the years of Hong Kong’s
has historically proved a good
on vocations} training to a six- fit with Hong Kong’s light manu- P e * ore c ° n
lane highway — and is good, factoring industry, .sensitive as last montn.
CllLci«7i Ac- a« TT.mm !. • a _ ■ -a. I . 1 < _ « . T . • _ J
Subsidies, according to Hong
Kong Government thinking, dis-
economy miracle. Thai took tort the market place, may lead one year and watches the next benefit of hindsight. But so
place in the fifties, when a war-
shattered economy picked up its
stretcher, walked • and then
started running. The industrial
momentum built up through the
sixties was sustained through
the seventies to provide the
lo inefficiencv and ultimately from the same factory.
the cardinal sin of protectionism Koag became famed as a place stamp his personality on Hong
— and are bad. which paid back investment in Kong that it is difficult not to
Sir Philip Haddon-Cave, for- five years or less. Whether posi- think in terms of ** the Mae-
merly Financial Secreary and tive non-interventionism will Lehose years ” as some coherent
now Chief Secretary, called it prove quite so suited to the economic and social era now
“positive non-interventionism " development of high technology giving way to another. What of
good years
broader social pros- cessor Mr Bremridge would be. years to develop a product, let House?
We catch
a lot of things
m our nets
One's a tropospheric scatter antenna and the
other's a net from the World Cup.
And they have a lot in common.
The connection is Cable and Wireless (HK) Ltd.
Because the one is part of our international
telephone systems. And the other's what you see
in our satellite relay of television programmes.
And these are just two of the wide ranging
services we offer.
From ship-shore to air-ground communications.
From telex to long-distance telephone services.
When it comes to communications around the
world or above it, we've got connections.
Cable & Wireless (HK) Ltd.
We’ve got connections.
New Mercury House, 22 Fenwick Slreei. Hong Kong.
Telephone: 5-283111 Telegram: CABLE WIRE Telex: 73240 CWADM HX.
Victoria^
harbourv.
Victoria;
B$Kong>
HONG
xm
lBurma.~~At
iShekO
^Stanley'
.r'Laosp
[Kampuchea
.Indonesia!
Sir /Edward Yonde, whey took over as -Governor of
Hong Kong in succession to .Sir Marr^y^iiow Lord---
MaeLehose^ He. is. a 57-year-old diplomat who -studied
at the Sehtfel of OrientalT^guages b^ the
Foreign Office in l947 and speaks Mandarin Chinese
fluently. It was in 1949 jthat he undeitook^iia renowned
mission behind codmlnnist lines > to; -'attempt to
negotiate the release : of.- HMS Amethyst,_trajpped in
the Yangtze River. He returiied to PeJdiig m 1974 as
. ■ British Ambassador. • . , . ^
alone show a profit, remains to
be seen.
Such is the Hong Kong which
HKS t thousand!
Sourc*1139Z/83 Budget |
educates and provides limited c; r ^„ rr L “
ni « SRtlC u . - - social security. What it strives
1 and 1975, achiev- broader economic base. n(K l0 do is intervene in the »n5 . ^
larginal real GDP “ Infrastructure " is a word economic activities of the Ita «L
in 1976 it leapt into much favoured in Hong Kong private sector, on the grounds S?”:’ ,« vf . , L i, n ^ I!*
aking up the hack- Government circles because it that Hong Kong’s open economy
al GDP growth of provides a shorthand expres- is subject to the operation of Murray was building apartment
subject tothe operation of Murra - V wa * buildln S apartment
teraarional markM forcL Mocks in. the New Territories.
hich it can neither predict nor ™ as dl AmbaSador d8 Jo
TrSLt^ed^^ ** h°e
SE? M cK
GDP
Per
Capita
GDP
120 :-
before coming to Hong Kong
it is to shifts in world product It is a dangerous temptation
io—>
—
y*
•\ - v
l' : *\
V*
l vvri:
V %'*
yM
m
p>
demand and able to deliver wigs to mark watersheds without the
Share oi
powerfully can the Governor
n l I I ui -LI ’ O ' —
. 1970 *75 80* 82 1970
1981 figures pretmninary estimates 4s, 1982 figures estimates
[Public Sec
the back of — and not, as he and his sue- industries which' might take five the new man in Government
■ So far, rather more hasbeen «bQut the lease, other domestic
seen of Sir Edward - himself issues ; -may be thrown into
than of his policy intentions, incidental relief.
he is right. While growth In
money terms' was 9 per cent
over the first; quarter of 1981,
perty market - with its flat
rentals of the “ equivalent of
principal piece of advice that active role in the reaching of a The budget forecast for GDP
Governors should not spend too settlement ?. Democracy exists growth tlus year is 8 per cent,
much time in .Government on]y at a very local level in aga^st 10- per cent m 1981.
House but should get about and. jj on „ Kob g a^-as such excites While the expanding financial
meet the people. Sir Edwarf rela tively . little ' excitement f . ;=">■. , . —
I 1 ?: 3 f .°lL 0W L C Li hlS .„ pr ^i ) . t ’ .L 1 ,!’ among prospective voters. But Its foUvlieroeS ...
While the. -expanding financial
has followed this precept, rid-
ing the MTR to talk with W hii e .the Falklands and Hong
passengers and visitmg. with Kon ^ i re Set in ■ radically
words
battered
Politically he Is. keeping his keer ^ y to- the British Govern-
powder drj. A policy speech ment » s views 0n the Importance
in the autumn is the likely nP ce i fj .p t prT«in 5 »ti rt vr tnr th^
time to expect some outline
of his agenda for the future.
The new Governor has, how-
ever. already spoken out on
the issue which now overhangs
and in retrospecr is likely to
__ incidental relief. . over the first quarter of 1981,. between £10,000 and £40,000 a
His predecessor "left as his ' L .wiU local opinion play an real growth was nil. ■ • year for unspectMulart famdy
= r ^ - — * acti^rolerin ?he reaching of a The budget forecast for GDP accommodation, .ffieyvtidp to
settlements Democracy exists growth this year is 8 per cent, price out Hong Kongs sand-
Sy “t a veri: loS^ev^in aga^t 10- per cent m 1198L wich.
Hong Kong and as such excites While the -expanding financial young professionals who - while
relatively little 1 excitement . .
among prospective voters. But Its f dlk heroeS - -
while - the Falklands and Hong ... home of thwr own. After the
Kong ire set in ■ radically are men who : ", Governmenfs latest package of
different political contexts. Hong, biuit ilfl.f ertflnes - ' ■ -
Vrt«» • nrani a ' hAwp - listened • . • ‘to- ^afford to run a car exther.
kwalv ?« thl British advent-. — V ' ' V - -. ' v . Hohv: Kong's per capita GDP
ment’s views on theModrtance seclor wilf cushion overall GDP . according to Governmerit figures,
of seiM^inatLi^for ^ against X inanufacturing slow- reached- the : equivalent of
Fa!ldand &uSders Doi self- dowu. perbaps 5 .to 6 percent - U.S.S5^00 in- 1980, : second only
de efmination ' count fo^ W- would be nearer the mark for to that of Japan in the Far
thin^n Hona -KaM ?' ' thfe year, . , .. , East-ttough, as Mr Bremridge
. Prfv. w.i.i-v The forecast bpdget surplus has remarked, 'averages can be
of comfort. Sood- different political contexts. Hong
areas of Kowloon. Kong . p ^ opie Wve - likened
Its folkiieroes
are men who :
built upfertanes
of self-determination- for the
Falkland; Islanders. Does self-
determination- count for ■any-
thing in Hong Kong?' .
Again, whaf of the British
rulers themselves ? While the
U.S.S5.2O0 in- 1980, : second only
to that of Japan in the Far
East— though, as Mr Bremridge
has remarked, ' averages can be
is HK$2.3bn. .plus a further misleading, not' least, because
prove to- have dominated bis mother-country affords_ the con-
. period of office— the. mtestion stifutional status, within wjiltm
of Hong Kong’s future status _ . . . .
vis-a-vis China. in Hong Kong, it has also pro- Jand saIes jccount for a third
Sir Edward had every ,con- yided some less palatMle. recent Government revenue and
fideoce, he has said, in the food for thought. UK overseas industrial ' land prices have
“ step-by-step ” system of ex- student fees the NationaUty plummeted, in some cases by
changes whereby Peking and Act and British participation In half since a, e ^{art of the year;
EEC textile quotas are instances 0n the positive side the Gov-
Budeet forecast for .‘and Britain-? are nor-linticil.
ihp mn margin- {or the establishment bf the wide gap hetweerr.Hong
i flE of a Capital works -reserve fnna. Kong> high and law-paid iiihabi-
stifutional status within which ^j-^ng . the • effective . -total - fants: -.""The long-term-purpose
?h l Hnnff e KnIp ri ft e ^ lSI^So^rS * nr ri us «P ‘ to HKS4Jbn. Bat, 0 f the encouragement: of the
Iand sales iroount f or a third creation of wealth,” he .said. " is
vi^d some lea paiat^le^recent 0 f Government revenue and no t to. enable the rich to get
industrial" land prices -have richer but rather to achieve an
Budget forecast for
GDP growth is 8%
against 10% in 1981
ana main s are not loeuncai. package of car-related tax
Those British measures may not i ncr e 3ses expected . to yield
nave been directed against Hong HKSlbn this year, assuming, a
maintenance of past' spending
patterns. But even with that.
New Territories lease runs out by his parent Government
in 1997. What will happen then threaten the . prosperity- of his
against 10 /o in Kong— but neither did they ma jatenMce of past spending
spare it. patterns. But even with that,
London have commented on the Where does a Governor stand achieving the HK$2.3bn surplus
future of Hong Kong when the when textile quotas supported may not be easy. ■
New Territories lease runs out by his parent Government Playing balance-sheet eco-
in 1997. What will happen then threaten the . prosperity- of his nomics with Hong Kong is,
is for Hong Kong to guess and dependent territory ?. Can he however, like applying the laws
Peking to say. tell Hong Kong it has been too of physics where the laws of
. Whereas neighbouring Macao successful for Britain's- good ? chemistry would- be more
survives in a diplomatic no- Demonstrably no. Sir Murray appropriate^ The law of gravity
raan's-land. the lease on Hong MaeLehose stood up for Hong was long ago forgotten by an
Kong’s New Territories, ob- Kong: S‘r Edward Youde. has economy which should have
tained by the British from said he will do the- same.. . dropped like a stone after the
is for Hong Kong to guess and dependent territory ?. Can he
Peking to say.
tell Hong Kong it has been too
Whereas neighbouring Macao successful for Britain’s-' good ?
survives in a diplomatic no- Demonstrably no. . Sir Murray
tained by the British from
China's 19th century rulers, ex-
its ratifications fail well into a phoenix.. Think rather. o-f a
5 the category of what Sherlock catalytic reaction between an
Si ™™/, , S tn Rri^n imdS Holmes' would have called a * enterprising Chinese workforce
in perpeturt} to Britain under nmKiam and exoat-rlate . skills .and
economy 'which should have
dropped like a stone after the :
While the lease question and war
instead
a phoenix.. Think rather of a -
earlier treaties, China aeknow-
Ih- fnrrp nf nAn » nf Governor faces a more-tangible
Grippe force of none of a *»>«*.
for a British adminUiration in JjLf _ecanon» ic
and expatriate skills . and
Government.
That catalyst would now
seem, however, to have com-
pleted Its job at least as far as
non-governmental expatriates
much of HongKongvidll lapse! which Hong Kong, can still non-governmental expatiates
The issue cannot therefore generate would give cause in are concerned. Most Chinese
simclv be overlooked Macaco ^any other countries te break businessmen and technocrats
st vie but some form of resolu- ° ut the champagne. - By Hong can run industry at least as
tion must be reached for the Kon 8 standards, however, .they efficiently as most of their
whole of Hong Kong. With his not Particularly bright • European counterparts,
dinlomatic background in China, DoI !l e stic exports this year Indeed expatriate managers
tion must be reached for the Kon 8 standards, however, .they efficiently as most of their
whole of Hong Kong. With his not Particularly bright • European counterparts,
diplomatic background in China. domestic exports this year Indeed expatriate managers
Sir Edward is admirably placed officially stated -to; grow, by —With their remuneration
to act as a pivot in discussions * ^ real teruiSi ; By - packages, cars, boats and
between London and Peking A P n J Mr Bremridge was sug- luxury flats — have become
and admirably placed in Hong £«ting that thai target would something of an awkward in-
£ 0n g * be difficult to reach — and the grediept in Hong Kong's social
Local businessmen reckon Government's first . quarter equation. While they can afford
anything from as little as two economic report suggests that to support the residential pro-
and admirably placed in Hong £ est V?£. *baA target would
y ong * be difficult to reach— and the
Local businessmen reckon
anything from as little as two
to even os many as eight years
before an unresolved lease
question would undermine con-
fidence and therefore prosperity
in Hong Kong. A settlement, or
lack of one. during Sir Edward's
governorship could therefore
prove equally crucial.
One of the more striking side*
lights on the lease question
came from an opinion poll
published in the spring by the
liberal-leaning Reform Club of.
Hong Kong: Some 32 per cent of
respondents were unaware that
the lease issue existed at alL
Their achievement is a remark-
able one in a society which has
publicly and relentlessly ex-
plored the question over the
last two or three years. But for
those people who are concerned
equation. While they can afford
to support the residential pro-
creation of wealth/* he .said. “ is
not to. enable the rich to get
richer but rather to achieve an
improving standard, of living in
all its aspects for the whole
community/’. v; . .
A more- rough-and-ready
formulation of that sentiment
might be that in an ideal Hong
Kong not only would the rich
get richer "but the poor would
get richer . too. Despite-' the
encroaching lease question,
there is no ftn-de-xiecle lethargy
in the air. Hong Kong’s greatest
— indeed' its only'— natural
resource apart from the har-
bour is the profit . motive.
Hong Konie's folk heroes- are
•men like Mr Li Ka-Shlng. Mr
Fung. Kxng Hey and Sir Y. K.
Pao. emigres who have built
up fortunes in-property, .finance
and shipping respectively to put
them among the ranter of the
world’s richest raen_ .
From the bustling hanks of
Central District to the flatted
factories of Kowloon Hong
Kong is a city, hard : at work
10 to 12 hours a day, six and
seven day? ' a ' week. It. is an
exhilarating place— and a neu-
rotic one. . . While . economists
such as Milton Friedman may
eulogise if, sociologists . may find
less encouraging its capacity for
narrowing down the goals of
life to the .eventual ownership
of a Mercedes-Benz and a week-
end in' Macao when it all gets
too much. Hoag Kong- does
not, however, have much time
for sociology. -After ‘all, there
is not much money in.it! :
BASIC STATISTICS
OCCUPATION
In ’the 1981 census, the total labour force was reported at 2.5m,
or 65.8 per cent of a total population' of 3.75m aged 15 and over,
including $2.5 per cent of the males and 49.5 per cent of the
females. The occupational structure of the working population
was:
Occupation Number %
Professional, technical and related workers .....! 143,700- - 6.0
Administrative and. managerial workers ..... 64J06 2JT
Clerical and related workers 2*13.905 12?
Sales workers /, .! 247^24 103
Service workers 374,093 15.6
Agricultural workers and fisherfolk- 50,676 ' 2JL
Production and related workers, transport equip- ' . . . -
ment operators and labourers ' 1,212/545 . 50.4
Armed forces and unclassifiable 17,118 0-7
Area:
. Population:
GDP: 1981
Per capita: 1981
Inflation: 1981
Trade: /
• ' Imports'. ‘
-Exports
Cnrrency: .. JR
1,000 sq km
5.106m
HKSt35^46
BK$26^60
... - 14-7%
. HKS138,303m
HKSl22,181m
JHK8102975 =11
AREA
Total ..... 2,404,067 100.0
Kong Kong Island and
' adjacent islets' ....A-
Kowloon and Stonecut-
ters island
New Kowloon and New
v, .Territories
.973.77
1,«6S;43
L ^u u:i
f| ®pan>.
^Hi'i
tit'.*
^cil un-
n>
. Vll 0 h;
- Tr..;’
■"-r ^
i '5i-, -.V'; n
I ” ' '
! V-'l
i .
I’^TpV /'
t.
s
■t* 1 0? -T ' 1
J* »
,( i i‘
JS»5
- 'MV-Or
,; '-r - -
l i
~>V ^
■ i^u » i - - ■> - . £- >•'; •-• > v.,* '.^- ~.Z* : 1. ■X-’J^S, -
V J ■** z —■-
> f ■ •
-j* m -j> X : y'
, f inancial Times Monday June 21 19S2
HONG KONG III
m
RELATIONS WITH CHINA
. - -
i>fr-
Anthony Walker in Peking assesses the political problems and trade ties
Keeping the golden goose happy
.. S^EfT.FROM Peking, the Hong
KvnS'.. problem is relatively
. g itt aU - in. . dimension compared
...9SSi ; the .host of other difflcui-
facihgr the Chinese Govero-
only. now consolidating its
ttoflSon after years of turmoil.
* Tnay~not -be a welcome
ti«p to Hong Kong
ts-.-and' investors; . many
h££35Uiom, : ..are understandably
flgjWp-pe&about the future. The
• • ■■ r Gtfvexnxnen t moves
jS&gWFey&i - at the best of times
Sv&Tcts.gkely to be several years
^yet .before a decision is made in
h«tog-'aboirt : Hong Kong.
i-Vx & Thatcher's planned visit
BS'ia September will help
attention on the question
p^ay.' eyeta lead to the begin-
■IjoF.-Tsonsttltations ’between
. stitidi and'.Cbinese Goveru-
r-r chkbh.TjmjH ta protect satis-
- ^Wdl r '® o nS'Kong‘s economic
*£$£*muEt bp, assumed "that both
- ^^s^r^ eotnmfUcd to that end.
gped,-The few/ public .state-
TXtrats made^fhus farby. Chinese
leaders on the future of Hong
Kong have stressed the impor-
tance. _of. maintaining business
confidence. But these state-
ments have been so vague as
to give no clue whatsoever to
Peking’s thinking about Hong
Kong.
Until very recently Chinese
leaders were content to leave
well alone, sticking to the for-
mula outlined when China
j joined the United Nations in
J 1972 that Hong Kong was
Chinese territory,' but the prob-
lem would be solved through
; negotiations when the time was
1 npe at some vague point well
• info die future.
To these same leaders, who
had seen China turned upside
; down during a few short years
at the onset of tbe cultural- to-.
volution 1997 must. seem.. an
awfully long way away. ...How-
ever, British officials in Peking
and Hong Kong say that in the
past year or so, .the Chinese
have Indicated they are at last
attempting to come to grips with
the problem.
When Humphrey Atkins.
Minister of State in the Foreign
Office, visited Peking in Janu-
ary this year he was assu red by
Zhao Ziyang, the Chinese Pre-
mier that. China wanted to’ pre-
serve Rong Kong's prosperity
and that tbe. Chinese. Govern-
ment was beginning to think
seriously about the 'problem.
This way- considered- n slight
advance on! Deng Xiaoping’s
advice to Hong Kong investors,
first stated to Sir = Murray
MacLehose early in- 1 1979 and
repeated • at least once since,
that they should “put their
hearts at -ease.”
Mr Deng, whosepolitfcal
fortunes have risen and fallen
and risen again, would not heed
reminding that such " advice
could hardly be regarded as a
cast-iron guarantee to anxious
Hong ■ Kong residents and
businessmen.
With perhaps a degree of
understatement, a British •
official here said recently:
“What the Chinese Government
has in mind no-one can be sure
about." He could perhaps have
added that not even the Chinese
themselves are sure about what
they have in mind.
It is almost certain that the
Chinese leadership is some
distance from even considering
a set of options with regard
to Hong Kong, but if they were
these are the sort of alterna-
tives they might consider.
• Allowing the status quo to
JOINT VENTURES IN CHINA
(Breakdown made according to investors)
Country. . .
Hong Kong •„
U.S.- .a
Japan
West Germany ..
Australia
The Philippines
Number of
joint
- - ventures
10
1
1
Total
investment
(USSm)
22.42
16.165
3.88
0.69
0.46
0.125
Imported
capital '
(US$m)
9 38
8.035
2.028
0.345
0.23
0.063
Total
20
43.74
0.063
ACCORDING TO TRADES
Number of
Total
Imported
Trade
joint
investment
capital
ventures
<US$m)
(US$m)
Light industry ...
4
7.35
3.465
Foodstuff
3
10.585
5293
Electronics
3
11.9
A93
Machine bail ding
3
4.742
2.353
Textile industry
2
6.125
- 2.462
Tourism 2
Source: China Economic News.
0.264
0.328
' Governing Committee could be taken in turn
: Independent zone
In a speech at a recent
\ . conference in Frankfort
Mr Richard Charles Lee,
' chairman of Hong Kong’s
Lee Hysan Estate
Company, who has served
. on two senior government
bodies, the Executive
Council and the Legisla-
. tiye Council, gave his
. personal assessment in
'*■ this extract of what might
- happen before 1997
■ /if Hong Kong’s future is as I
perceive it the event will
signal, a hew approach . to
„ . international relationships
based on the mutual respect
/of the British and Chinese
Governments with the interest
*' of aU parties, including that
of the local population, in
/_ . gnintf-
Ghina has already stated her
case in general and if
1. Britain agrees In principle
' J details will have to be worked
■ out This will take several
’ . years. Many people want to
^ . ■' " know the form of government
- as well as the legal and
.monetary systems Hong Kong
/./' '-is'Ukely to have after 1907.
. ’ I.have no crystal ball but I am
“ willing to suggest some of the
•- • ‘. possibilities so as to stimu-
„ . late discussion. I venture to
suggest, that there will be
> . ! government by a Governing
, - • .Committee .and Hong Kong
“ independent special
_ • .- 'zone ** within China and under
/' the Chinese flag.
■ .Die" leadership of the Gorern-
nig Committee would be taken
-■ -. -.in turn by a Chinese and a
■ • /. Briton, say, every ttree or
a;.: viour years. The modification
should be introduced gradu-
... ally before 1997 to prevent
•any shocks caused by abrupt
changes. An early, introduc-
tion-of the modification would
.also, give time to test the
- v ■ system and - make any adjust-
ments that might be neces-
: TWXegislative Council would
continue with some appointed
i • members . as an intenm
measure for a few years. after
5- , ; which the ehtire councH could
perhaps be elected- Hong
' : ; Kong: has already started the
^ 7 . .election of district committees
(-- /-/from the beginning of this
. -'^year: ■
. / 'It -seems likely that the elec-
tions of Legislative Council
members could be developed
from this system, with the
Civil Service remaining much
the same as at present
Let us assume that the present
laws of Hong Kong, which
have, world-wide recognition,
will continue to be enforced
after 1997 with the consent
of China. Where, then, is
the final appeal for court
cases to be taken? - -Since
China claims sovereignty over
the whole territory the final
appeal should not go before
tbe judicial committee of tbe
Privy Council.
Neither do I think it should
go to Peking, because the
courts there work under a
totally different legal -system
and many cases, for example,
commercial disputes, would
be outside their experience.
As I see it, tbe solution lies
in the creation of a Hong
Kong Final Court of Appeal.
It would be a Hong Kong
court as distinct from a
British court, although special
arrangements might he made
for British judges who are
members of the Privy CotmcD
to continue to assist Hong
Kong with their services in
a new capacity acceptable to
China, Britain and Hong
Kong.
Before 1972, the exchange fund
and general reserves were tied
to sterling under Colonial
regulations and, as a result,
Hong Kong lost heavily
through the weakness of the
pound and successive devalu-
ations. In 1972, the Hong
Kong dollar broke away from
sterling and diversified. The
diversification of the fund is
being managed successfully
and Hong Kong has now
become the world’s third
largest financial centre. This
advantage should be vigor-
' ously maintained.
It is one of the points the
Chinese leaders may well have
had In mind when they spake
of preserving Hong Kong’S
present status.
When the year 1997 arrives the
Exchange Fond should not
be transferred to London or
to Peking but should be kept
locally or at any other place
which Hong Kong itself may
decide.
This would perpetuate the
independence of . the . Hong
Kong dollar and continue to
strengthen International confi-
dence in Hong Kong as a
business centre.
continue indefinitely as they are
apparently prepared to do with
Macao.
• Some sharing of responsibili-
ties between China and Britain,
or at least the presence in Hong
Kong of a senior Chinese offi-
cial with powers to influence the
conduct of policy.
• The designation of Hong Kong
as a special administrative
region under Article 30 of the
new . Draft Chinese Constitu-
tion — a sort of super special
economic zone.
NEW TERRITORIES
IN 1997
All these solutions are sub-
ject to a number of permuta-
tions and all would create prob-
lems for both sides. What is
certain is that there is no chance
of China renewing a lease that
it does not even recognise.
There is little doubt that in
the official Chinese mind, the
problems of Taiwan and Hong
Kong are in some way psycho-
logically linked. The Chinese
used to say that the Taiwan
problem would be solved first.
It is most unlikely they would
say the same thing today.
Recent visitors to China have
quietly had their attention
drawn to Peking's nine-point
proposal issued last September
for the reunification of Taiwan
and the mainland. It has been
discreetly suggested that this
might give some clue to the
solution that might emerge to
the Hong Kong problem.
Point three of the reunifica-
tion proposal may, in the minds
of the Chinese leadership, be
relevant with modifications to
Hong Kong. It states: “After
the country is reunified, Taiwaa
can enjoy a high degree of
autonomy as a special admini-
strative region. — The central
government will not Interfere
with local affairs on Taiwan.”
Article SO of tbe recently
released draft constitution
mirrors this provision. It nys:
“The state may, where neces-
sary. establish special admini-
strative regions. The rules and
regulations in force in special
administrative regions shall be
stipulated by law according to
specific conditions."
While diplomats here say
Article 30 was drafted specific-
ally with Taiwan in mind, they
concede it could be applied to
Hong Kong. Such a “ solution.”
if it were to be announced now.
would, in the' words of one
British official, have a serious
effect on business confidence in
Hong Kong.
The point about the Taiwan
reunification proposals and
Article 30 of the constitution Is
that they are likely to serve as
reference points in Pekin* for
consideration of the Hong Kong
problem.
However, at the end of the
day when the Chinese leader-
ship sits down to debate seri-
ously the issue of Hong Kong its
main concern will be how to
keep the golden goose laying its
golden eggs. In other words
how to maintain Hong Kong as
a secure market for billions of
dollars worth of Chinese pro-
ducts, how to protect tbe effici-
ency of this booming re-export
centre and- bow to guarantee
that Hong Kong continues to be
a robust source of investment
and technical skills.
The problem for Mr Deng and
his supporters is how to keep
the golden goose on the nest
while at the same time protect-
ing themselves from the accusa-
tion that any arrangement they
might make involves an abrogat-
ing of Chinese sovereignty.
Aliy deal that recalls treaty
arrangements of the past would
not be acceptable to members of
the Chinese leadership. Those
in Hong Kong hoping for the
status quo to be maintained
may be disappointed.
PROFILE: DAVID LI
Prepared for changes
CAMBRIDGE - EDUCATED
David Li, the 43-year-old
chief executive of the Bank
’ of East Asia is typical of the
younger breed of Bong Kong
Chinese businessmen who are
keeping an anxious eye on.
Peking for clues as to how
China will handle tbe Hong
Kong problem.
He says that some clarification
of Hong Kong’s position will
- be required soon- if confi-
dence is to be. maintained.
“ I think the Chinese are very
clever,” he says, " they don’t
want to rock the boat I think
there will be a period of con-
sultation and negotiation.”
Mr Li, whose bank Is one of
the largest and most
respected in' Hong Kong, is
prepared for changes Jn the
way in which Hong Kong
is administered . although
naturally -he hopes tbe
present free enterprise
. system remains intact
“I think we all would like to
have a bigger say and
participate in. the welfare and
prosperity of Hong Kong,”
he says. “We all feel the
present system may have to
change towards a more repre-
sentative and more’ open
system in a controllable
sense. But once you have real
politics coming into play then
I don’t htink it would be
acceptable lo China either, so
it's a delicate balance to work
out
“Whether the British stay or
not is another matter, but I
wish the present system to
continue because it will main-
tain stability and give people
confidence to invest in Hong
Kong, and whatever invest-
ment there is in Hong Kong
is also good for China.
Mr Li, whose bank is the only
foreign bank to have main-
tained a branch in China
which can take deposits (as
an agent for the People's
Bank of China) through all
the years of communist rule
— it is located in Shanghai —
believes that overseas Chinese
businessmen have an advant-
age in dealing with mainland
officials.
He instances his own recent
experience where on mention-
ing the name of his family
village in Guangdong
province to a senior Chinese
official he was treated to a
description of economic pro-
gress bring made there. Mr
Li. who was born in England,
has never visited the village.
Asked whether he had run into
resentment in his dealings
with Chinese officials, Mr La
said that never in his experi-
ence had he encountered
difficulties. “They accept the
material differences.” he said.
Mr Li’s links with China — -his
bank is involved in financing
a range of ventures in the
People’s Republic of China —
do not prevent his doing
business with Taiwan. He
travels there from 'time to
time, something, he says, that
does not appear to cause any
complications ip his dealings
with Peking.
Mr Li finds doing business with
China time consuming, but
believes that progress is being
made. He points out that the
Bank of East Asia helped
finance the first joint venture
in China (a 'catering business
located at Peking airport)
and also helped launch Visa
card in China with the Bank
of America.
The bank also represents
American and British banks
in dealings with the Chinese,
particularly in the area of
trade financing. Mr Li would
like to push his bank into
new areas of the China
business, but all this takes
time. •
“I think the Chinese are very
careful about entering into
joint venture agreements so
they go into very minute
detail as to the responsi-
bilities of the parties," he
says.
Mr Li describes the question
of the lease as the “topic of
the day ” and says “ it’s on
everyone’s mind,” but he
cannot offer any special
insights as to how the
problem will be resolved. It
will have to be cleared up
ODe way or another in three
or four years, he says, or
people may stop investing.
Business in Hong Kong ?
Go in with our knowledge onyour side
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CONSOLIDATED ASSETS AT 31 DECEMBER 1981 EXCEED USSS3 BILLION.
'£
HONG KONG IV
Financial Times Monday June 212982 ; ;
RELATIONS WITH CHINA
Sharp increase in growth rate
BALANCE OF TRADE BETWEEN HONG KONG AND CHINA
ANY DAY of the week the
modern port facilities in Hong
Kong which has the world’s
third busiest container
terminal, are used to tranship
millions of dollars worth of
Chinese products.
Hong Kong is a huge re-
export centre for Chinese goods,
and this part of its business
is continuing to grow at a rapid
rate. In the years 1970-1977
China re-exports grew by value
at about 22 per cent per year.
In the four years to 19S1 the
growth accelerated by more
than 50 per cent per annum.
By 19S0, China ranked first as
Hong Kong's largest market for
re-exports, up from 20th posi-
tion in 1970.
Among the big volume China
re-exports arc clothing, cotton
fabrics and foodstuffs. Re-
exports of goods to China have
shown an even more spectacular
increase in percentage terms.
In 1979 re-exports to China
were up by 514.5 per cent on
the year before, dropping down
to a 73.3 per cent growth last
year.
Hong Kong's value as a
re-export centre for the China
trade will continue well into
the next century simply because
China’s own transport facilities
— road, rail and port — are
likely to remain inadequate for
a very long time.
Hong Kong's efficiency and
China's sluggishness in port
operations are illustrated by
figures given recently to a Hong
i CHINESE RE-EXPORTS
ANTHONY WALKER
Kong business symposium by
Dr Victor Sit of the Department
of Geography at Hong Kong
University. The figures showed
that in 19S0 the average turn-
around time for foreign vessels
at Chinese ports was 7.7 days.
In Hong Kong the turnaround
time for container ships is 2.6
days and only 15.5 hours for
containerised vessels.
Many traders, understand-
ably. prefer to tranship goods
to and from China through
Hong Kong because, while
extra handling of cargo is
involved, a great deal of time
is saved.
While Hong Kong boasts some
of the most sophisticated con-
tainer-handling terminals in the
world, China’s container facili-
ties are limited. In. 1980, Chinese
ports handled only 380,000 tons
of. containerised cargo.
A brake on the further
development of Hong Kong’s
growth as a re-export centre for
China are the poor rail and road
communications with nearby
Guangdong province. The rail
system between Hong Kong and
Canton has only limited capacity
to carry containers. This prob-
lem will not be overcome until
a double track railway line Is
built
Apart from facilitating the
efficient, transhipment of goods
to. and from the Chinese main-
land. Hong Kong’s other prime
value to China as a re-export
centre is that it acts as some-
thing of a political - filter for
trade with Taiwan, Indonesia,
South Korea and even Israel and
South Africa. Over several
years there, has been rapid
growth in this “indirect” trade
particularly with Taiwan .and
South Korea.
In the three years to 19S1
there was spectacular growth
in trade between China and
Taiwan . through Hong Kong
from about US$70m worth in
1979 to about USS460m worth
last year. In 1981, two-way
trade between China and South
Korea through Hong Kong
reached about US$215m, a
sharp ■ increase on the year
before.
In the first three months of
this year, trade between China
and Taiwan and South Korea
slipped compared with the same
period last year. This. is be-
lieved to 1 have been brought
about by political directives
from Peking that are making it
more difficult for' Hong Kong
middlemen to secure Chfa eae
import icencees for gods
originating in Taiwan and
South Korea;
Nevertheless, trade between
China and .Taiwan and South'
Korea remains significant A
Western commodities dealer,
based in Hong Kong, confirmed
that shipments of Chinese coal
are continuing to find their
way to South Korea. China is
said to have shipped about 1.5m
tons of coal to South Korea last
year.
"Re-exports into China from
Taiwan, Indonesia, South Korea
and Singapore, with whom
China does not have diplomatic
relations, accounted for more
■ than 40 per cant of goods tran-
shipped through Hong Kong
into -China last year. -
1979—^—'
%
HK$m growth
Total imports from China S'f -
Retained imports from China •• figs 37.5
Re-exports of China origin' “i®? 3 .
Total exports to China 1 -?i?
Domestic exports to China _ 603, 6«.4
Re-exports to China . 1*315 : 5145-'
Visible trade deficit * '13,283 .;
HKSm growth HKSm growfij
21,9*8 / UA 28,510 315
13,554 - 42.1
8,394 48.2
-6547 225.7
1,605 1665
4,642
1A701
16,676 23.0 '
12,834 . 525
10,968. 755
2,924 825
8,044 '.73.8-
1S541 v '
PRINCIPAL COMMODITIES
Re-exports ‘of Chink bright
. -1979—
: Commodities
Clothing
Miscellaneous textile made-op articles
Vegetables and fruit
Cotton fabrics, 1 woven
Other miscellaneous manufactured articles ..I—
Hiseellaneons crude vegetable materials
All commodities ; ..... ...t....../...
' HK8m' growth
724 120:7
. 726 545
342 39.6
331 36.2
267 49.2 -
.• 413 "25:9
/ 5,663 54*
BK$m growth - • HK$ra growth
, 1,294 7SJ? .1,838 42D
847 167
349 2D
. 365 16*
431 • «L4
SU- 843-
992 17.1
789 126.1
651 784
626 45*
564 9:7
, r .8*54 «A2 02,834 52.9
HONG KONG AS AN ENTREPOT FOR CHINA
RE-EXPORTS TO CHINA
/
Re-exports
of China
Re-exports
Re-exports of
origin as
to China
% of total
China origin
% of. total
(HKSm)
re-exports
(HKSm)
reexports
1979
1*315
6j»
5,663
- 28J
-1980
4,642
15.4
8,394
272
1981
8,044
192
12.834
30.7 "
■Commodifies 7 .f
Textiles . j;.:-.. ..JV---
Telecommunications and sound recording :and
reproducing apparatus and equipment
Road vehicles .1=.-..-....^..
Electrical machinery
Watches and clocks. -
All commodities ;
HKSm growth HKSm growth
222 L01 Oil IP 5162
-—1981 —
%
HKSm growth
; ; WTO. 13L7
2,800.0
3,383.3
2,600.0
950.0
514.5
444.2S2A
282 173*:
- 259 859.3
344 585J
4,642 253.0
1.035 .13&1
279 .344
■ 359 38-6
221- 53^
8,044 7X3
Dozens of Chinese organisations are represented, many under the aegis of China Resources
Peking’s business involvement expands
FOREIGN INVESTMENT
Compensation trade
THE MAN in the well-cut blue finance houses, trade offices, Corporation and the Technical Hong Kong,
business suit and silk tie is emporiums, property’ develop- Import Corporation to name a Added to
the epitome of the quietly ment companies. shipping few. central goto
successful businessman. His activities, to name just some Qiina Resources controls and distribi:
Resources
echmcal Hong Kong. of about US$200m. Kin Kwong operation are a container manu-
name a Added to the activities of the will bold 80 per cent of the factoring company and a steel
central government purchasing equity. Hong Kong Land and rolling mill. •
controls and distribution agencies such Jardines will have 15 per cent CMSN controls wharves and
manner is prudent. Large sums of the enterprises it controls, three oil storage depots in Hong as China Resources, are new and 5 per cent respectively.
Name of
the province}
municipality and
autonomous region
operation are a container manu- Beijing
factoring company and a steel „
rolling mill. • „ Tianjin —
CMSN controls wharves and Shanghai
godowns in Hongkong, one of Guangdong
• - Imported •
Number equipment
of ecu- . value :
tracts iirU.&3ni
15 28J1-
: Processing and
''■assembling with
supplied materials
■ ■ Imported
Number equipment
of-con- value',
tracts in UJSJtm
H8 1.46
of money are mentioned in a is deeply involved in Hong Kong and recently established organisations being established Another nrominent Chinese 1116 world's busiest harbours,
soft voice without emphasis. A Kong’s financial life. an entemnw develonment by the provinces. Guanedone — — ^ r» amt aisn ante ae aeremt far tlu I Ujtan
small frown appears if ques- Chinese
tioning about financial matters Kong and the New Territories f 0r investment.
. * w — » , , ■ _ _ JXUUtUvl UC V UJJlIIvXI I V/UUIUOX ~ — *
racial life. an enterprise development by fte provinces. Guangdong organisation in Hone Kong is and also acts as agent for the
mvestinents in Hong department to seek out projects Fl ^!f?J Lave ream^y estab- cMsn. the China Merchant China Ocean Shipping Company,
becomes too direct,
Mr H. Chen is indeed
are estimated to exceed
U.S.$2bn and could well be
St^' Navigation C^y, COSCO.
successful businessman, but not worth U.S33bn. _ At least
on his own account. As senior U.S.Slbn has been invested in
Food imports
products.
ac, i „ — which is 60 per cent owned by Another Peking-controlled /
inv ‘r5i' the Chinese Ministry of Com- company in shipping and trans- ^J an8sa
fi nnng rl
Zhejiang
munications. CMSN, until a few port is Far East Enterprising Shandong
deputy general manager of the the past several years. and the organisations which ment Corporation, a Peking- p 0ly * chj na - s coastal tra^
Bank of China’s Hong Kong China is now a significant come under its direct control, controlled investment company. £ ut is now havine to comnete
branch he is responsible for a property owner and will have there are China-controlled com- Since 1977 Kiu Kwong has been . ’
huge ranee of trade-related done nicely out of a series of panies like Hua Yuan which extremely active in the property
- . .■ I _ 1* i-U pnu-d nilivh nt-flir* if- line* moHn - «k* mm aIvuahk
transactions involving tens of shrewd purchases it has made acts as agent for the China market not always with com-
nu I lions of dollars.
The Bank of China at 2A
Des Voeux Road with its
granite-carved lions at the
since 1977 when the Hong Kong Light Industrial Products pletely satisfactory results.
property market began to take Import and Export Corporation Kiu Kwong engaged in what
poly on China's coastal trade, Farenco. which acts as agents Lfaonine
but is now having to compete. for the China National Foreign s *"
Trade Transportation Corpora- *
Shekou estate tion and the China National
Chartering Corporation. China
An important CMSN project is now moving into the ship
37
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with its off - China’s business presence and Ng Fung Hong which is the one businessman in Hong Kong the Shemeli
at. the ta ’Si'S? 2.7 yten, (or the China National filM « WM
is the Shekou industrial estate chartering business.
within the Shenzen special eco- Hong Kong government, offi-
doorway is the most prominent rapidly indeed since the mid- Cereals, Oils and Foodstuffs
Chinese enterprise in Hong 1970s. — r —
Kong Together with its 12 Today, several dozen Chinese Some SO per cent of all food 1980 for US$60m. The proper-
sister banks, the Bank of China organisations have represents- consumed in Hong Kong comes ties were sold late last year at a
controls a big slice of the Hong tive offices in Hong Kong, many from china. • f loss - after the Hong Kong
Kong financial market — esti- of them under the aegis of Then there are the distribu- property market dived
rials have no exact figure for,
Import and Export Corporation.
Kong financial market — esti- of them under the aegis of Then there are the distribu- property market diveu
mated by some western bankers China Resources which has a tors of Chinese prodacts in . 0ne of **■“ ^ w ? n 5. s
in Hong Kong to amount to as staff of several thousand and Hong Kong. The China Products important projects is its joint
la tion" over the purchase of ” 0111)0 *°? e separates Hong rials have no exact figure for
two sites in Kowloon Bay in f ong “e New Territories the number of people employed
1980 for US$60m. The proper- Guangdong -province, in Hong Kong by/ Chinese
ties were sold late last year at a has built a 600-metre organisations, but one official
loss - after the Hong Kong wharf at Shekou and work -is said that those directly or m-
property market dived. proceeding on establishing directly oh Peking’s payroll
One of Kiu K Wong’s most industries on the estate. would run into tens of thou-
Overseas investors
face frustration
would run -into tens of thou-
Accbrding to a Hong Kong sands. It is estimated that FOR INVESTORS in China's re-negotiation* of the original
much as 40 per cent.
The Bank of China however before 1949.
IQ 1 K V» A uu WAVi uivu^iiiiu HUM ■ 1 vs | Ac axvilgi 1 UV Vall lll cX 1 IVVUVu r • » - . _ _ __ _ _ , , , _ _ T — . ■ ■ W o — - —
was established in Hong Kong Company, for example, runs a venture with Hong Kong Land Government official who re- about 50 organisations, lmdud- newly established special econo- agreement most problems have
number of department stores.
1 lie uaun. vi wimia liunv M.1 — — .mMwvi, ui uuvui , . . .. .
is «nly one example, albeit the Under China Resources there Other organisations active in develop property oyer the mass merits there are relatively pro- China.
Jardine Matheson to centiy visited Shekou achieve- ing banks, are controlled by mjc zones it has been a difficult been ironed out A perhaps
few years as Western capitalist worrying development as . far
IS TMH * vine XAiim^lV, tuuv&l IIIW v«-o v»iuv* Vi fj niiUj q IIWIW avikiv * - - - — ’ _ . - ... , t . • . - — *7- _i ■ * “ ■ w M — 7--—- — — —
most 'important, of the mush- are a range of trading corpora- the merchandising of Chinese transit rail depot at Tsuen Wan raising compared with the rest As due Hong Kong official practices have run head on into as other investors in the zone
r ■ _ _ mm _ .m a ■ --m. 1 1 f U _ V H ftrtinn A rtll PI fr flflTYl t\i at qH CQ1/I' I nA m/tvanen in I'QInHu C a — * - * ^ AL. _ mm mm -* 3 — AV..& —
roomina Chinese business pres- lions such as the China National goods are the CMna Merchan- in Kowloon. The development of Shenzen. Already completed said: “The increase in Peking’s i a sluggish Sociaiist system with are concerned is that as part
ence in Hong Kong. The Machinery Import and Export efise Emporium Limited and the backed by the Bank of China are an oxygen bottling plant business involvement in Hong sometimes unhappy con- of tfie re-negotiations Chinese
People’s Republic, through its Corporation Metals and Yue Hwa Company. There are and the Nanyang Commercial and a marine paint factory. Kong over the past several sequences for the foreign party, workers on the project are get-
banks, insurances companies, Minerals Import and Export about 20 Chinese emporiums in Bank involves the expenditure Other ventures soon to go into years has been quite dramatic. Poor levels of productivity, ting paid much the same wages
>• %
meddling .party officials, corrup- as those doing a similar job in
tion and the simple fact that it - Hong Kong!
PROFILE: LORD KADOORIE
has been almost impossible to Foreign business consultants
«• ««*6 aaaaaa
BNP
»_ Mao
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Group
Taking the mistakes of
Humpty Dumpty to heart
sack unsatisfactory workers familiar with wage structures
have 1 combined to make life in the . special economic zone
awkward
investor.
At a
overseas ...warn that there is a danger of
the Chinese pricing themselves
business out of the market by allowing
symposium in -Hong Kong one wage levels to rise too high,
such investor, Mr Alan Lau, The investor is likely to be
who had set np a shoemaltihg reluctant to risk capital in a
venture in Shenzen (one of the zone -investment — given all the
venture in Shenzen (one o? the zone investment — given all the
zones) in 1978, outlined some of teething problems he can expect
the difficulties confronting the —if wage level* are uhcompeti-
Banque Nationale de Paris, first bank in
France with 2000 branches, has an
international network of 700 branches in
seventy-seven countries worldwide.
Hong Kong
i BNP Central Branch and 19 Branches
► BNP Representative Office
Central Building, Queen's Road, Central,
.Branch Tel: 246081 Rep. Office Tel: 257077
Telex 73442 NATIOPAR
■ BNP- DAIWA (HONG KONG) LTD Subsidiary
40104072 Connaught Centre,
1 Connaught Place
Tel: (5) 234161
• BNP FINANCE HONG KONG Subsidiary .
Central Building, Queen's Road, Central,
Tel. (5)246 081
Macau
• BNP Representative Office
People’s Republic of China
• BNP Beging Representative Office
• BNPGuangzhou Representative Office
• BNP Shanghai Liaison Office
Taman Taipei
• BNP Representative Office
•*
Banque Nationale de Paris :j
Head Office .
16 Boulevard desltaliens PARIS 75009
Tel: 244-4546 Tlx: 280 605
UK Subsidiary:
Banque NaHondedePcrfe p.l.c.
8-13 King William Street LONDON EC4P4HS
«• Tel: 01-626 5678 Tlx: 883412 ,
••V#VeVeVeV*VeVe%VeVV#Ve%%%VeVeVA^^V/» # *
••
••
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On the chair behind the
desk in the office of Lord
Kadoorie of Hong Kong sits
a small Humpty Dumpty dolL
“It’s to remind you of what
happens if yon lose yonr
balance, ” said Lord Kadoorie
when asked about this incon-
gruous addition to the
furnishings of his penthouse
suite with its magnificent
view of the harbour and its
glass cabinet lined with price-
less jade antiques.
Lord Kadoorie appears in
no danger of losing his equi-
librium. Now in his eighties,
he is almost certainly the
wisest owl in the Hong Kong
business community. For that
reason alone his views on
the future of the British
colony and more particularly
Its relations with China are
worth recording.
Lord Kadoorie is optimistic
about the future, describing
Hong Kong as a “very valu-
able asset" to the Chinese. It
is, be says, a neutral point of
contact a “fluid flywheel"— he
is much given to engineering
similes — that facilitates
China's dealings with the out-
side world.
Lord Kadoorie, whose main
business is China Light and'
Power, the Hong Kong utility,
speaks from the vantage point
of his long experience in the
region which includes the
loss of at least one fortune
when the Com mun ists took
over Shanghai
This, you would think,
would make him cautious
about future relations with
China. Instead, he is posi-.
tively bullish about the deve-
lopment of economic ties
between Hong Kong and
rhinn to the mutual advant-
age of each side. •
“The Hong Kong of. today
is . . . a neutral point of con-
tact between East and West,”
he told the Lords In May. “It
Is also a service station which
enables China to regulate the
flow of expertise required to
fuel its modernisation
programmes." 1
Lord Kadoorie, who is
perhaps rather old-fashioned
in matters of business and
who believes, no doubt that a
man’s word .should he his
Lord Kadoorie: wisest
owl in the community
bond is rather scornful of the
legal rigamarole that sur-
rounds business dealings
between China and the West
these days.
“Enterprises with China
must be based on mutual
trust rather than enforceable
contracts, which make for
difficulties for * conscientious
lawyers and accountants," he
told the Lords. “And this
joint venturism unquestion-
ably can best be carried out
through Hong Kong using
local expertise and experi-
ences.
Lord Kadoorie sees the
special economic zones being
established in Guangdong
province, adjacent to Hone
Kong, as performing a critical
role in future relations
between China and tiie-British
colony.
“ Goodwill.* he. said in a
recent interview, * wiU largely
depend on how successful
these industrial zones become.
Therefore we have an interest
in making them a success,"
Failure, he warned* would
reflect badly on Hong Kong
and may be Interpreted by the
Chinese as evidence that Hong
Kong businessmen were being
less than helpful.
“ Honesty -creates trust,” he
said, " trust creates confidence,
unless there Is that -confidence
you really cannot deal to
mutual advantage with the
Chinese- Once confidence is
established it is a very valu-
able asset."
China Light and Power is
presently discussing with the
Chinese the -possibility of
bnllding a nuclear power
station near Canton to supply
power to Guangdong province
and to Hong Kong itself. By
any standards, it would be a
huge undertaking. Costs
would run into several trillion
dollars.
Lord Kadoorie said that a
feasibility study prepared
under the supervision of
China Light and Power
. engineers- Is now with - the
Chinese Government. He was
not prepared to predict the
outcome of Peking’s deliber-
ations except to say the pro-
ject is “more likely to
happen than not to happen.”
He claims that there is no
feeling of nationalisin' as snch
In Hong Kong: people know
ft as a neutral point of
contact, he says. Bnt perhaps
-there is no more avowed
Hong Kong nationalist than
Lord Kadoorie - himself. His
speeches to the Lords — he
has given two since he was
elevated to the peerage last
year — robustly proclaim
Hong Kong’s successes.
Hong Kong, he told hfs
fellow Lords in May, was the
world’s biggest exporter of
garments, watches and toys..
It had the third busiest con-
tainer terminal in the world,
and was the . third most Im- ,
portrait financial centre aEter j
New York and London ... a I
generation after if took the i
.first halting steps to find a ‘
new economic role it. is stitt;
the - 'people of Hong Kong;
who are. the key fo its -
success. r
On the question of a some-
what uncertain future, at
least until the question of the
lease is resolved. Lord
Kadoorie is sanguine: “ You
- have to behave In a normal,
ordinary way ... be 'ogjtl*
mlstlc. If you’re wrong,
you’re wrong.- There is
nothing you can do about it*
foreign entrepreneur. He . com- tive.
plained of what, he described as A visit to the Sbenzen Zone
the “iron rice bowl" problem, is to find yourself in the middle
reference to the fact that in of a big construction site.
most Chinese enterprises Large-scale infrastructure pro-
, jects are under way to trans-
form this once sleepy rural area
SPECIAL ECONOMIC.
7ANFQ «>8t is being borne by the
C.VJ 1 S.W Chinese Government but in the
Futian area of Shenzen a Hong
Kong company. Hopewell China
. . j Development (Shenzen) is
workers are guaranteed a life- involved, in a joint venture to
SPECIAL ECONOMIC
ZONES
time .job whether they work develop 33 sq km of land,
aw a wKta ■£r?JLS i 2fL5S
Srise* 0 ” “ Chtaese S
. “Always it was the iron rice SJmS 1 !, “ jH!
w 111 b * shared as to 49 per
t? Hope^U and 51 percer
the management from dismis- cZ^tL CBTtt t0
sin* iiuwnnotnnt.'’ «irf 1116 Chinese Government
sing the incompetent," he said.
Mr Lau proposed that an
The Chinese would no doubt
investor be given “ 100 per cent g l ° d evelop the rest of the
freedom ” to manage his enter- 32^-6km zone on this basis but
prise, including the right to dis- this stage it appears that
miss unsatisfactory staff on f° re *sn investors are holding
back from, getting involved in
seven days notice.
Mr Lau’s difficulties are capital works programmes.
typical of those experienced by ? l l***t until they are- certain
dozens of investors in Shenzen. ft be a success.
For many the process of educat- the end of March last
ing Chinese officials and workers f $L4bn had been pledged
In the ways of the competitive “ foreign- investment- for the
West has been, expensive and at Shenzen zone but something
times hugely frustrating.
awarding' to- recent been invested.
less than 8250m had actually
reports, progress is being made. About .1,000 contracts have
particularly on the question of been signed by foreign investors
labour relations. New regnla- in Shenzen. most of them for
tions approved by the National small-scale agreements for pro-
People’s Congress last year cessing and assembling products
allow the foreign investor more with materials supplied from
flexibility in the hiring and outside China.
firing of staff— and perhaps Foreign, banks will soon be
what is more important, in the allowed to .open branches in
payment of incentives far Shenzen to conduct trade
greater productivity.
financing and_ look' after foreign'
One foreign enterprise which ' oflironcy business,
got off to a bad start bnt is now He population of the Shen-
nmmag relatively smoothly . zen zone is expected to rise to
:thanks to a rearrangement of about lm by the year 2000 At
management responsibilities is present it is something less than
a joint venture quarry financed 10.0,000, both urban and rural.
by. Readymix Concrete of Au& according to official figures.
; trslia, a GSR subsidiary.
With _ that sort of projected
. Readymix had severe prob- population growth' and the
leras in the initial stages in scale of planned investment.
imposing management, disci- , the. Chinese are creatine a boom
ptine on the enterprise. GMnese town— with all the assodated
managers would simply ignore, problems one would exoect to.
or misinterpret directives from flow from such an ambitious
tije head office m Hong Kong, project For Peking it is ahold
whicb^ was attempting to experiment Progress in the
co-ordinate, supplies of aggre- Shenz^p zone will act as some-
gate across the border into the thing of a barometer of the
New Territories. • success or faQuie of China*
Through consultations and open-door poEcy. * . •
---.I
Financial Times Monday June 21- 1982
“HONGKONG OFFERS
ii
.EXPORTERS
99
Lord limerick
Chairman of the British Overseas Trade Board
Hong Kong is a market worth £15,500,000,000. Its
total imports in 1981 reached £12.6 billion and are
projected to reach £15.5 billion this year.
Apart from U.K.’s domestic exports to Hong Kong,
the U.K. order book for capital goods, in Hong Kong -
has never been so full. Hong Kong’s imports of capital .
goods in 1981 totalled £1.8 billion with U.K. taking a ■
£260 million share of this. Contracts for capital equipment
and engineering consultancy, both for private and public
developments in Hong Kong, will offer many new
opportunities for U.K. businessmen in 1982/83.
These' developments will involve contracts worth an .
estimated £2 billion.
. 'Apart from the capital goods sector, tremendous
potential also exists in a number of fields within the
raw materials and. semi-inanufactuires sector amounting
to 40% of Hong Kong’s total imports.
Hong Kong’s total imports of fibrics and yam alone
accounted for £1.8 billion in ,1981.
The Facts •
Recent developmentprojeets^ro^
significantly to U.K.’s earnings from engineering
consulting services in Hong Kong included: —
' ' • £ million
— Rq>lacement airport : 525
— Sewage treatment work 176
— New town and other developments •. 640
— Mass Transit Railway extension 645
—Power station 310
— Aqueduct V ! - .118
—Cement plant -80
— Roadworks and fixed crossing 365
£2,859 million
The Future
Hong Kong’s dynamic expansion as a trading
centre has dictated the growth of its infrastructure;
through its public works and housing departments the
Government is at this moment committed to spend at
least £10 billion on various developments in the. next
decade. "■
One of the largest private development corporations
in Hong Kong has acquired land in the North-Western
New Territories to build a privately constructed new
town with a planned population of 500,000. .
The future looks bright.
Britain is sharing in Hong Kong’s prosperity. In
1982, based on the average annual growth rate for the
last three years, it is estimated that Brifain’s total,
exports to Hong Kong will exceed those to Japan,
making Hong Kong Britain’s biggest market in Asia. '
Hong Kong is on the doorstep of the largest, most
exciting, developing market in die world, China,
where the opportunities for the future are incalculable..
There are many opportunities fire British business in
Hong Kong in die years ahead, but the pace must be
maintained.
The Hong Kong Trade Development Council can
help you find the right contacts. Telephone the
H.K.T.D;G. today..
! The service is free. The business is worth £15.5 .
billion and growing. .
HONG KONG TRADE DEVELOPMENT COUNCIL
14/16 Cockspur Street, London SW1Y 5DP
. ■ Telephone: {01) 930-7955
Cable: CONOTRAD LONDON SW1 Telex: 916923 CONLON G
PROMOTING TRADE WITH BRITAIN
' Offices in; Hong Kong, Amsterdam, Frankfurt, Hamburg, Manchester, Marseille, Milan, Paris, Stockholm, Vienna,
:>'■/ . Zurich, Chicago, .Dallas, Los Angeles, Mexico City, New York, Panama, Toronto, Sydney, Osaka, Tokyo, Nairobi.
. ' ; . . Also consultant representatives in Abidjan, Athens, Barcelona, Dubai, Lagos.
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HONG KONG VI
Financial Times Monoay J«ae zi -iwa
David Fread examines the territory’s financial services.
Although helped by its role as an off-shore base for Tokyo
Hong Kong has established robust markets on its own terms
HONG KONG Is an international finan-
da I centre of growing importance. Its
main rival in the Far East has tradi-
tionally been portrayed as Singapore.
But the territory's continuing success
is probably far more dependent on -
events to the north, in Japan.
In several areas Hong Kong has .
seized a role as an off-shore base for -
Tokyo markets, and might be vainer'
able if the Japanese authorities eased
wa stin g domestic restrictions.
Hong Kong Is now the main syndi- - "'.
cited loan centre in'the Far East, for .
example, although the Japanese ' are
considering es tablishing an offshore .
status for banks tn Tokyo. International -
'fund management in the Far East has
been gravitating to Hong Kong, even
though the bulk of investment is prob-
ably c hanne lled the Japanese
of the relationship fe the Hong Kbnjj
Commodity Exchange, which has been
revived from death’s door by
brokers and adapted to suit their
requirements.
Elsewhere Hong Kong has estah-
- lished robust markets on its own term&
' The -70-year-old Chinese Gold and
Silver Exchange now provides support
for the activities of a range of interna-
tional gold market makers, while the
vtoek - market— presently split between
four exchanges— boasts the highest
..liquidity ratio in the world. - ■_ .
•* As enduring as the myth about Hong
- Kong’s rivalry with Singapore is the
belief that the' territory offers u
' capitalism untrammelled by rules and
regulations. In fact regulation has .
- . been exp anding quite rapidly in. recent
■ years, although there i q some way to
Europe or theU«S, Nor. Is the erisfanre
of a banking cartel m-lnterest rate<H-
now eomlng .under pressure— quite
consistent with the - image of red-
blooded competitive capitalism. .
In toms 'of international! finance
Hong Ktxng's .main, ad^pt^ages jtave
lain in the pro-business attitude of
government ,, asso ciated withLa. lack of
political- activity, and -a .simple -and
favourable tax environment Onto. set
in train the -expansion.; of fliuindal ^er-
vlces acquires a momentum of Its own.
Nevertheless, ; mounting wages and
rents— caused. In pat by tbeterritory’s
popularity— hate reduced tome of the
cost benefits, that Hong Kong used to
enjoy. Without' tome- more formal
arrangement with China as to "what is
to btooine «T the territoiy at the end
of the 'eenlxiry/the. q^
dime&sion J eouia - xebc md f with a
vengeance. ;..Y.i " - - • ••
May 1982.
The Shareholders of UBAN-Arab Japanese Finance
Ltd. have resolved at an Extraordinary General
Meeting held on 8th March, 1982, to increase the
authorised and issued capital of their Company to
HK$100m, of which HK$75m has been paid. A further
tranche of HK$25m is expected to be paid up early in
1983.
To signal the expanded role of their Company the
Shareholders have further resolved to change its
name , with effect from 1st May, 1982, to:-
I IBAN
INTERNATIONAL LTD.
UBAN International Ltd. is a joint venture Deposit^
Taking Company affiliated with Al-UBAF Group,
which is the largest consortium of Arab and
International banks based in Paris, London, New York,
Frankfurt and Rome. The total balance sheet footing of
the Group exceeds US$13 billion.
Apart from UBAN International Ltd., Hongkong, the
Group is represented in Asia by branches of UBAF in
Tokyo, Seoul and Singapore.
Shareholders of UBAN International Ltd.
Arab : UB1C, AJahli Bank of Kuwait, Arab African
International Bank, Arab Bank Ltd./ Banque Audi S.A.L., Libyan Arab
Foreign Bank, National Bank of Abu Dhabi, Riyad Bank. Ltd., Sudan
Commercial Bank, Yemen Bank for Reconstruction and Development.
Japanese : The Bank of Tokyo Ltd., The Long-Term Credit Bank
of Japan Ltd., The Mitsui Bank Ltd., The Nomura Securities Co. Ltd.,
The Sanwa Bank Ltd.
22nd floor, Alexandra House, Chater Road, Hong Kong.
Telephone: 5-261102-6. Cable: UBAN ARAB. Telex: 75386.
View of part of the banking' sector as seen pom the ferry
THE BANKING industry in
Hong Kong is half-way through
a two-year restructuring pro-
gramme, and the signs are that
it wiU emerge from the process
looking very different. More-
over it is likely that the out-
come will not quite be what the
financial authorities had in
mind when they launched the
reform programme last year.
More by accident than design,
the cartel agreement under
which banks operate seems to
have been undermined. Mr
Tom Welsh, chairman of the
Hong Kong Asociatwra of
Banks as well as a general
manager of the Hongkong and
Shanghai Banking Corporation
talks of “ stresses and strains ”
in the interest rate agreement
Mr Colin Stevens, general
manager of Barclays Bank
International in Hong Kong is
more forthright “ The recent
agreement that there should be
no ' cartel on deposits of
HK$500,000 and -over really
spells the death knelL of the
cartel,” he says.
The original plan envisaged
the creation of a three-tier
banking system of banks, regis-
tered deposit-taking companies
(DTCs) ■ and licensed - DTCs,
each of which would have a
defined sphere of operations.
However, the original plan gave
the best plum to the newly-
created licensed DTCs which
could pay . market rates for.
deposits above HK$500,000.
The banks realised that this
would effectively hobble them
in the key wholesale money
area, and so earlier this year it
was announced that the banks
would no longer be bound by
the interest rate agreement
above this threshold.
This means that wholesale
operations have been opened
up for free competition, and
the question is the speed and
extent to which this will spread
into the retail market. Such a
development would cause a
major shake-up in domestic
banking in a territory in which
there are getting on for 1,300
bank branches of one kind or
another.
The restructuring plan was
initiated by the success of the
DTCs in taking deposits. There
was concern among the hanks
that they, were taking the lion’s
sharp of the deposit growth that
was going. In 1981, for instance,
DTCs’ deposits expanded by 42
per cent, while the growth in
banks' demand, time and savings
accounts was only 23 per cent.
Under the restructuring, the
tier of registered DTCs will con-
tinue to observe the-HK$50,000
minimum for deposits, but will
only be allowed to offer maturi-
ties of more than three months.
This is a change that is likely
to curb the activity-of registered
DTCs considerably, - since in
Hong Kong depositors like to
keep their assets short and
liquid. It may well be that the
number of registered DTCs trill
DEPOSITS
(HK$m£ '
Banks
Deposit-takers
1979 • 1980 1981
67,385 83,490 109,227
... 24^95 ‘ 42,716 ‘ fi0>*79
Source: Hong Kong Government-
fall from the 350 level estab-
lished at the end of 1981.
The registered DTCs will have
to pay more for their deposits,
and they are likely to nave to
specialise in certain types of
lending. Mr Kent de M. Price,
senior vicepresident of Citi-
bank; believes that the regis-
tered DTCs will henceforth con-
centrate on mortgage .finance
and' consumer, lending.
' While the banks will see less
competition from this area, they
will be in direct conflict with
the new category of licensed
DTCs for • deposits above
HK$ 500,000, where, since March
1, the interest rate agreement
has been lifted.
Since February DTCs iiave
been granted licensed status on
a batch-by-batch basis,: and
there should be about 20 by the
end of the summer. Early names
BANKING
INDUSTRY
were Jardine Fleming; Kl eta-
wort Benson (HK), Nomura and
Pierson Heldring and Pierson:
On this basis it looks as if the
licensed DTCs will be the Hong
Kong equivalent in standing to
the London merchant banks.
But they may well prove able to
develop a formidable presence
in the wholesale money markets,
in competition with the banks,
some of whose operations may
be rather less efficient
At the same time the
moratorium on the granting of
new banking licences in force
since 1979 was lifted last year.
So banking competition has
increased with the entry last
year of eight major inter-
national banks, particularly
from Japan. Earlier this year a
new local bank was licensed in
the shape of Sun Hung Kai, the
first for many years. - The
number, of licensed banks' In
Hong Kong now stands at 125,
of which 122 are operating.
. While potential {treasures are
growing oh the deposit .side for
banks, there are also signs that
the handsome spread between
deposit and lending rates may
be beginning to be eroded from
the loans side.
The banks have traditionally
maintained a spread of' three
points, between deposit and
“best lending” rate. However,
. One syndication banker esti- ,
mates that, wherever the loans •-'f',.' *
may be booked, well over haif ->^"^
of the work, in arranging loans
in the. region is undertaken in -
Hong Kong. The hanks heavily . ir
involved in syndication Include vT” ’
big U.S. names, like Oiase.# : '” £ '
Manhattan, Citibank, Manufac- T; ”■
turers Hanover, and Bank ol : ?~' ' v
America. '
the Hong Kong Interbank
Offered Bate (HIbor) has tradi-
tionally been below "best lend-
ing” rate and is no.t controlled
by the interest rate rules. There
are signs that more and more
loans are being arranged at this
rate. “Many of the big
syndicated loans and bigger
loans not syndicated are now
expressed in terms of Hibor,”
says Mr Welsh. '
The licensing of new foreign
banks and the liberalisation of
the wholesale money market are
signs that Mr John Bremridge,
the new Financial Secretary,
has more of an eye to the needs
of. Hong Kong as a regional
financial centre than the calls
of local banks for protection.
Until now Tokyo has ruled itself
out as a banking centre for the
region, and Hong Kong stands
out as- an obvious alternative,
backed by the huge money flows
associated with its role as an
entrepot for China’s inter-
national trade.
From the UK, Iioyds Ban* £
International, the Midland and '. S J ,
NatWest are active ■ as art 1;* ]
French and West German hanks L'TT
The size of the loans are going i
up, while countries - like SnXrJ,
Lanka, India and Papua New 1* lir ,
Guinea are raising their profiles
in the market Nevertheless
there are a dot of banks chasing
the business. So rates tend to yV^ 3n °
be fine.
Fine rates in the AMa-doIlar
market mean that it -Is scorned
by local banks like- the Hong- 3
kong and Shanghai, since Is,in '
domestic retail banking can be ^l rr K n; ‘
so profitable. According to Mr. '
Stevens' all the nine -branches :
so far established by Barclays ■ *' 1
Bank International- have been i'
profitable within - a year of
opening
. The Hongkong and Shanghai
Bank’s results underime the "
Tbe other main rival is
Singapore, which had been
enjoying an artificial advantage
until recently due to Hong
Kong's imposition of a with-
holding tax on foreign currency
deposits.
The banking industry has
been urging the authorities to
relax the withholding tax for
several years. -Last February in
his Budget speech Mr Brezn-
ridge announced that- the 15
per cent withholding tax on
foreign currency deposits would
be withdrawn immediately,
while the rate on Hong Kong
currency deposits would be
reduced from 15 per cent to
10 per cenL The results have
been dramatic, with bankers
estimating that foreign cur-
rency deposits rose by 20 or 30
per cent in the first couple of
months.
It is still too earfy to say to
what extent this was a one-off
shift back home of deposits held
abroad by local residents. It
is likely, however, that more
international money will find a
home in Hong Kong; and that'
the ’territory’s status as a fund-
ing centre. negligible until tins
year, w2l be enhanced.
This in turn will boost Hong
Kong's already strong position,
as a regional centre for loan'
syndication. Until now the - pat-
tern has . been for Singapore '
to take predominance in fund-
ing centre terms, and for Hong
Kong, to have the edge when
it came- to loan syndication.
benefits of operating in an
expanding economy. Between
1979 and 1981 its earnings per
share have grown at the rate of
35 per cent compound annually.
Unlike
current VV.",
accounts represent only 14 per
cent of Hong Kong banks’ s» v '
retail deposits. Nearly half the
total is held in. savings accounts, ft
which currently offer a 10 per vT
cent rate of interest -and from
which instant withdrawals can ^
be made. So Hong Kong tends
not to be a cheque-book society.
Instead, customers usually draw
out cash from their interest-
bearing savings . accounts when
they want to spend.
Branches can be open to 11
pm to supply cash requirements,
and of course the more branches ’ s -
it has, the more attractive a r-
bank is to its customers. On ' v -
the other hand, these extensive
networks . are extremely II
expensive. m - \ v *
If interest rates drop,, and the I
pressure on the interest rate \ I
cartel intensifies, there might ;
have to be some retrenchment
in branches. Already there are ;
mutterings about introducing { .
bank charges on the lines of the r ' "A
UK '
Meanwhile, the' Chairman of:
the Hongkong and Shanghai^
Bank has warned shareholders;
to expect a slower rate, of pro-:
gress this year, which under-;]
lines the slowdown in borrowing;}
In the territory in the light ofri
Jigh interest rates.. For some->.
nanhs, which backed ' untried^.;;-^
property developers. .In. thea
recent boom, thont mloW - '
recent boom, there might
some bad debts' coming home
roost,- • . V: ,
Financial Times Monday June. 21 1982
HONG KONG VII
VII
FINANCE
°kyo
te rm s
sSSfi?*
continues to widen
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FINANCIAL
SERVICES
DAVID FREUD
• JT IS -a cliche - among business-
* Hong Kong .that the
-temtoty is the world’s third
most, important financia l centre
a ^ New York, and London.
■ ;Wf ap, one could deny that
fflhre axe some vigorous markets
-there ^are also some significant
gatis.;in the range of financial
services on offer, although, some
are being rapidly
.-• Perhaps -the most obvious is
the . absence of a bond market.
The. Government of Hong Kong
r .traditionany runs a financial
^suiplns, a» it is not surpris ing
’ "thijf.theria . is no Government
on offer, it is likely that
: : tePJ^eats. a key reason for
the failure of a commercial
diaper market to develop,
'nearest approach - to it is
-BSM#fet for certificates of
^"Aepostt-fostered by some of the
^Jfflneaga banks in -the past few
e«3, in particular Citibank, the
-Tokyo,- Barclays Bank
. -Tand Credit Lyonnais. The mer-
•-/fi&^toahk Jardine Fleming has
r-besu particularly active as' a
‘ seomdaiy market maker, here.
•y -\Hong Kong has- had an active
< ' f insurance - mar k et for many
;</4fccadeSi but- it; is : only in .the
past ‘ 10 years that . insurance
^ brokers, - mainly from the UK
'/.-.and ; the .U.S., have began to
r'vmake their presence felt. In
the: marine hull market the
^bjfpk&n.still tend to turn to the
£ Lfcddn insurance market to
j-pfece: their business.-
c- ■ -interbank market is
k t active, and most international
.K money brokets have operations'
°->ia; the 1 territory. - While short-
' ■ tern foreign exchange positions -
can be matched each way, how-
v ever, it is very difficult to cover
•;Iong-term- foreign currency
■-] liabilities. This is' because Hong
*j Kong does not specialise in
foreign currency assets against
which they can be matched.
As Mr Christopher Eugster.
of Kleinwort, Benson (Hong
Kong), points out: “This is a
severe limitation.”
Hong 1 Kong is certainly the
But, with life insurance a
minimal factor (considered un-
lucky among the Chinese com-
munity). institutional funds are
strictly limited and tend to be
related to the established
Hongs.
Wardley. a- subsidiary of the
it now has U.S.SSOOm under
management. Some 60 to TO per
cent of the funds under manage-
ment. are. institutional, and two-
thirds come f run the UK The
main area of investment is the
Tokyo Slock Exchange.. Even
though the headquarters of the
rtiilvt wuruiev. a-suusiuiary oi me jiciuh utters ui uie
pl3Ce f ° r gQld ' Hongkong Bank, and Jardine fund is in Hong Kong, it has
tradmg. however. /Fleming therefore tend to pick
Fond management also seems up the lion’s share of this
to be becoming an increasingly . business. Local individuals,
significant pan of the terri- meanwhile, lend to do their own
lory’s financial armoury. Among, investing in the domestic
* ~ most important fund man- market, while if they invest
the
agers- in Hong Kong are
Wardley, Jardine Fleming,
Henderson Baring, GT, Gart-
more and Fidelity. The clients
are mainly international.
There is some local institu-
Supplying coital projects and. tional money, as provident
therefore, no one has longterm 'schemes become more popular.
abroad their- first choice tends
to be the UK and the Hkely
intermediary one of the big U.S.
banks.
Henderson Baring is one of
the fastest growing fund man-
agers based in Hong Kong and
from a standing start in 1975
hardly any investment in the
local market.
So why is the. fund based in
Hong Kong? According to Mr
John D. Bolsover, the managing
director: “ If you invest in the
Far East you want to be on the
spot. We preferred. Hong Kong
to Tokyo' partly for tax reasons
and partly because it is an
easier place for- expatriate
staff- to live.
“People speak English and
there are domestic support sen-
HONGKONG AND SHANGHAI BANKING CORPORATION
Success and a hint of mystery
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THE DOMINANT banking
force .fn Hong Kong Is the
Hongkong and Shanghai
Banking Corporation, It has a
network of 270 branched in
the territory and by market
capitalisation is one of the
, . biggest financial institutions
In the world.
. It owns a 60 per cent
. stake In the Hang Seng hank,
the second biggest bank in
the region, a “ Chinese ” bank
which has a network d{f 62
branches and plans' for a
2:/. .further 18 well advanced.
^ ■ The corporation — often re-
Teiyeff to 'simpty as “The
' r Bank”— is the' adviser to the
/ 'Hong Kong Government in
. banking matters and is
p*-“i responsible for more than 80
^ per cent of the note Issue in
pv the territory.; •* _
.v : ' -''' It was founded in 1865, but
w^r 1 - hard hit by the Second
!■£ World War and the com-
*“'j" muni st revolution in China,
v-i 1 where It lost all but its
Shanghai branch. Since then
sd;.-4f Tibs' expanded rapidly, and,
r* vin addition to the Hang
Seng, has significant holdings
ip* in the Saudi British Bank (40
- V per -'-cent) and the Marine.
cV Midland Bank in New York
j : JU(5T per cent).
, ■ Other businesses include
t -' Wayfoong Finance ' and the
'7?- merchant bank Wardley in
'-'.V Hong Kong, and outside
' ■' Hong Kong the Mercantile
Bank in India and Antony
Gibbs in London. Through
' -wayh'ohg Investment it holds
slgnlfieaht stakes in -Cathay
'Pacific Airways, .the South
Chtua • Morning Post and
various offshoots of Sir Yue-
'j. kong Pao's worldwide ship-
; Z ping group. .
* Its •* latest expansion move-
the widely publicised attempt
(«■■=/ to take over the Royal Bank '
of Scotland — was thwarted by
t~ the-- UK Monopolies and
Mergers Commission. If. has
not yet derided on an alterna-
tive strategy. .
'„ . According to Mr Tom
Welsh, a general manager of
The Bank. We got bogged
down* in the Marine Midland
: deal which took much longer
than we expected and which
. diverted our attention for a
longtime.
“When the announcement
of. the Royal Bank Standard
Chartered deal came through
' we jumped in and that occu-
pied our energies for quite a
while. We are still in the
aftermath of that; still trying
to think where we are more
than where we’re going.*’
However, The Bank has
dearly not given up all hopes
of gaining a significant
presence in UK retail bank-
ing. “ We could move Into the
UK still if the right oppor-
tunity came up,” says' Mr
Welsh. “One would like. to
think saner counsels would
prevail if a deal emerged In
the interests of both parties
mid that it would go through.”
The Bank has a reputation
for being mysterious, partly-
because of its policy of main-
taining secret inner reserves..
This practice Is perhaps not
too exceptional in Inters
national terms but its reputa-
tion is more justified when it .
comes to attempts to unravel
how its conducts its business,
. and from where it derives its
profits.
It is clear that The Bank’s
big retail deposit -base gives
it plenty of funds for its own
loan book, and It is a very
significant lender oh the inter-
bank market On the loans
side, the three most significant
businesses are probably Im-
port/export finance, and back-
ing for property and shipping.
One technique that stands
out in The Bank’s history is
the way it has picked success-
ful entrepreneurs and backed
them to the hilt. Critics would
argue that any bank with such
a wide customer base would
have come across the entre-
preneurs, while the economic
growth of Hong Kong made it
difficult for them to fail. -
Mr Welsh points out: “ This
is our head office and where
we make our decisions. Other
banks have head offices else-
where. and while the local
branch might want to go for
bust on someone they might
find It difficult to persuade
head office.”
Some of. the successful en-
trepreneurs backed tip by the
Bank are now on its board —
including such well known
businessmen as Sir Yuekpug
Pad; deputy chairman of The
Bank, and Mr li . Ka-shing,
chairman of Cheung Kong.
DP.
Mr Tom Welsh: waiting
for the right opportunity
in the UK
THE BANK OF CHINA
Strong commercial
links in the territory
-rs?
jCs
S.&
WO-
l _•
c
CTB’s HONG KONG LINK
CTB AUSTRALIA LIMITED
Wholly owned subsidiary of
^ Commonwealth Trading
: ; . Bank of Australia
is bised in Hong Kong and operates in. the Asia-
. . Pacific market with emphasis on
v % Wholesale lending "
(direct & syndicated)
• Foreign exchange
'% Deposit taking
- 0 Money market
Address: 700-71 2 Tower II Admiralty Centre,
18 Harconrt Road HK. Phone: 5-286441 (general)
~~ 5-276181, 276190 f foreign exchange)
. Telex: 60466 CTB HX (general)
v : 608024s 61629 CTB HX (foreign exchange)
•
The Bank of China, based
In Beijing, has had a branch
in Hong Kong since the; 1920s.
Expansion has led to the
establishment of a farther 10
sab-branches in the territory.
This understates, however,
the true banking presence of
the People’s Republic Of
China, for there are an
additional 12 sister banks
whieh are also controlled from
Beijing.
They have very close rela-
tions with each other and in
total operate more than 200
branches in Hong Kong,, the
second biggest network after
that of the Hongkong and
S hanghai Rank
The Bank of China is very
much a commercial bank in
Hong Kong and is Involved
-In a wide range of business,
from lead managing
syndicated loans to backing
property developments and
providing mortgages. Its most
important activity is con-
nected with trade with main-
land China. •
Mr H. Chen, senior deputy
general manager of the Hong
Kong branch, estimates that
something like three-quarters
of the branch's business is
connected with loans for -
Imports and. exports to and
from the mainland.
The sister banks have a very
strong position in this trade,
although other Hong Kong-
based banks are how trying to
break In, and have been open-
ing offices in ,dtJes like
Beijing and Shanghai.. The
Hong Kong branch 1$' also , an
important foreign exchange
centre for the mainland, .with
substantial transfers of Hong
Kong dollars -into trading
currencies like the U.S. dollar.
’ The brandiZ enjoys a fair
measure of independence
from bead office control in
terms of the day to day run-
ning of its business. Deals
must move up into the
HK$10m region before they
are in the area where
approval from central office
may be required. According
■ to Mr Chen. “ most of the time
we can handle the business
in Hong Kong.”
The branch started to trans-
fer Its accounts onto computer
three years ago. So far it has
transferred savings accounts,
fixed deposit and current ac-
counts, and is now working on
businesses like hills. The pro-
gramme includes ail the sister
banks so It is likely to take
some time .vet. Meanwhile,
the branch has ordered cash
dispensing machines, and
should be installing them this
year.
A growing business for the
branch is financing projects in
the new economic zones estab-
lished on the Chinese main-
land near Hong Kong. So far
loans for this purpose have
been extended mainly to small
and medium-sized businesses.
Progress, while steady, is still
slow, and many Hoiig Kong
businessmen are wary of pro-
jects in the zones because of
the lack of infrastructure.
Meanwhile, in recent years
the branch and Its sisters
have become a formidable
force as deposit-gatherers,
with the immigrant work-
force turning to it as the best
way to transmit money to re-
latives on the mainland. The
sister banks are now pushing
hard at the Hongkong and
Shanghai’s traditional domin-
ance in this area.
OP.
vices. Furthermore, while the
Japanese are terribly polite to
visitors, they tend to be
suspicious of (oreigners actually
living in Japan.”
Turning to the gold market,
the Kam Ngan iChinese Cold
and Silver Exchange j dates
from 1910 and. having built a
strong reputation for reliability
and efficiency over the years,
achieves substantial volume.
Foreign brokers were attracted
in the second half of the 1970s
by the arbitrage possibilities
and an active and separate
market has developed.
In 197S there were six bodies
making prices on the market;
the number has now moved up
to IS and includes the six
major London houses, three
Swiss banks and several U.S.
brokers. The Loco-London
market, as it is called, now
handies more volume than the
Kam Ngan.
Even so. the Kam Ngan re-
mains of key importance.
According to Mr Geoff Gratton-
Brunt. managing director of
Sharps Pixley Wardley: “ The
Loco-London market sets its
prices very much on the base
established by the Kam ‘Ngan.
taking the Hong Kong U.S.
dollar exchange rate into
account” . .
Overseas Trust Bank Ltd.
A Hong Kong Chinese bank that Is reaching out to title would
■ - r ‘"-‘r
’«v
V-- , . rr - . > r
A wide range of local and overseas branches offering a full range of banking services.
CONTROLLING OFFICE:
»!■ BaUding, JM IAmcntt Rond,
Hong Knag, lib S-*>S6»S7 i.W tasni
Tefcv: IKHIB lf\ idcncnl Oflieri
< Mbit Addrr*: I MW TUI'S!
MACAU MAIN BRANCH:
51-SJ. Atnidi Po Infante !>. HrofWpir. >luaa
Titfilll litre UM2I7 OH DB.V
COLOMBO BRANCH:
VMC l Budding. .<4 Bmtof Srm.
f-ofomtK, l.Sn lonhn TrL3?ttel$ ton)
Tdrv: 1*9 it
LONDON BRANCHES:
City Branch
Stock Ktdaagr T<n«r, 1VF,
Old Broad .Street, l.wrfnn fCN JHP
Tefc BI-4Z8-5172 Tdrv: 887750 OVTSEA G
West End Branch:
M Old Crompton Street, London WtV t\R '
Trt; 81-7U-.Vb7i Triexj Z.T23I CMATRU G
BAHRAIN BRANCH:
Maaona t mat. GtnnnnwM Rood, Manama,
Rrftra/n Trl: ilfWS Tftrv am OTB K
SAN FRANCISCO BRANCH:
Mil Mcwpitn? SBW.SM himckii,
CaRfonto <Mllt I .s. Trf: l41S)3M-3S0
Tdri; KC \ 27toM OTBIK
JAKARTA-
REPRESENTATn'E OFFICE;
nha llinpn lidfag. 7;K,
Jahn Jrmfanl Sudirmn U. Jakarta. Indoimia.
Id: SUM) ick\: 44799 UTBLJKT
WE PUTAPEEMIUM
ON SECURITYAND SERVICE.
Mong Kong Rc brings you the set nriiv anti smite of r»nc nf
the region's leading reinsurance t-ompnnit^. Hacked bv dir lirstiuixcs of
. die Inchcape Group I IKKK i.aier.s to the needs
of insure is tbioughout the Ka.st. .
The Hong Kong Reinsurance & Cienend Insurance Co. Ltd.
A mcinltrr ui ilic liu.iica|<o f.ruujt.
’>lh Hair. FJi.-abriii Hiuisc.
1!'i 0. C .lout •Mcr Ki'jtl. i lung Kin it;.
Tel: j 790%;Vj Telex: 11 XW75b Cable: IIKRHNS
The Exchange Business
Since the Hongkong and Shanghai Bank
first subscribed to the Reuter Monitor Service
in 1 975, work! money markets have witnessed
a remarkable growth in activity. The Reuter
- Monitor has more than kept pace with this
expansion: it is now available in 59 countries
and carries information on more than 56
currencies.
Major market leaders such as the
Hongkong and Shanghai Bank keep abreast of
these rapidfy moving markets through the
Reuter Monitor Service. Simultaneously, the
‘ Bank keeps other parties informed of its latest
rates both for the Hong Kong dollar and other
leading currencies on the Bank’s Reuler
Monitor page ‘'nSBC".
On a single desk-top terminal, Reuter
Monitdrsubscribers gain instant access to
foreign exchange information provided by
leading banks, brokers arid financial
institutions worldwide. They also have access
to the international news that moves those
.markets, in a format that’s easy to read.
More than 1 0,500 money, securities and
commodities traders are now on the Reuter
Monitor network.
“You can't afford to be in foreign
exchange without the Reuter MonitorService”,
says Gerry Dobby, Foreign Exchange
Manager, the Hongkong and Shanghai Bank.
The Hongkong and Shanghai Bank was
the first bank in Asia to be connected to the new
Reuter Monitor Dealing Service.
World markets as they move
Reuters Limited _
5/F, Gloucester Tower
11 Pedder Street, Central;
Hong Kong. Tel: 5-264261
vm
HONG KONG
Financial Tiines Monday . ;Jun^
Travelling down the Western
Connaught Centre, 37th floor,
Hong Kong
Telex: 73347 & 73104 FOREX HX
Telephone: 5-247106 (5 fines), 5-227091 (5 lines),
5-241101 (4 lines)
Established since. 1962.
'■ Merchant Banking
a Bullion Dealing
*• Stock Broking & Portfolio Management
a Insurance
i^ang l^ang, &A.1UE.
(a member of the Forex Group of Companies)
56 Avenida De Almeida Riberio
Macau
Teles: 88243- FOREX OM
Telephone: 8171 1 (4 lines), 73508, 88774 (2 lines)
Established since 1935
a Commercial Banking
a Investment Banking
HONG KONG'S HEALTHY ap-
petite for the good things m
| life means that it has four
i stock exchanges. The Hong
Kong Stock Exchange is well
established, but at the time of
the boom in the late 1960s and
early 1970s its operation was
widely perceived to be hide-
bound and restrictive. So in
1969 the Far East Stock ex-
change was set up, and its
success spawned the Kam Ngan
Stock Exchange two years
In W72 the Kowloon exchange
also -opened for business — but
never' really got off the ground
and today handles- only 1 per
cent of turnover. By compari-
son the Far East handles about
48 per cent, the Kam Ngan 35
per cent and the Hong Kong
17 per cent. . •
• Tor' a' population. o£ 5m, four
separate exchanges was clearly
an unnecessary extravagance, so
plans for unification are well
advanced, although the new all-
embracing exchange now looks
likely to be ready in 1985 rather
than in 1984 as originally
planned. The main problem of
unification will be one of scale.
The trading system on au the
existing exchanges is broker to
broker, with selling and buying
offers marked up on huge ex-
i pauses of white board ana
-direct response, by other
i brokers. On busy days the
scramble to mark up can be-
come physical. A new unified
exchange would have no fewer
than 2.000 floor traders, and it
takes only limited imagination
to understand the chaos that
could ensue.
The elected chairman of the
unified exchange, Mr Woo Hon-
Fai, at present the chairman
of the Kam Ngan, undertook
at the end of last month a tour
of some of the world's major
exchanges, including visits to
the U.S. and London.
He says that no decision has
yet been reached cm how trad-
ing on the new exchange will
be organised, but the likelihood
is that the present broker-to-
broker arrangements vriH be
maintained and there could
possibly be an electronic means
of matching bargains and
settlements,- Furthermore, of
the 2,060 trades, many repre-
sent overlapping famfiy
Interests, so there might well
be considerable consolidation of
seats.'
The unification is thoroughly
welcomed by stockbrokers.
According to Mr Frank Heath,
a director of Sun Hung Kai, the
leading firm of local -brokers.
UNIFICATION
DAVID. FREUD
the 1 existence of four e x c h ang es
was an anachronism reflecting
personality conflicts move t h a n *
anything else.
“It will be much better to
have an fr agmented market;
it will cut down rumours,'
allow ' computerised settlement
and a better index," said Mr
Heath. “It will also make
Hong Kong appear more profes-
sional in the eyes of outside
investors."
At one stage there was con-
cern that foreign brokers— r
es sentially those -based In
London— would be excluded
from membership. Most of the
brokers did not have full mem-
bership "of exchanges, tend in g •
to use the specialist trading
brokers on the floors to conduct
their transactions, and dividing
the commission with them.
Some of the brokers have been
hurrying to establish full
membership, but it looks as if
their worries were exaggerated.
Certainly, Mr Woo Hon-Fai has
come round to the view that all
established traders should he
accepted. “Of course people
who are already established hete
will be allowed on the new
unified exchange," he says.
Thfifreerfor-all in stock trad- will be there with, statutory -toe operation^ vv
ing eame to an abrupt end when power in the background, m a It is noty et^cerjato whemer p
the market collapsed in the mid- monitoring role.’' . an , 'hf t Sm§S - If?
1970s and ' tte Government Basically, he fa- happy with, - &
stepped into- the arena to take the market mechanisms. “It is Jong - to. the
somemeasure of control.. The one of- the. w few exchanges- '
shatters went up on the creation where an 'individual can give an J^ 48 ' r^. -
of new exchanges in 1074, , order and wafeh his broker da ^
. At the same time a .Securities the deal” Nor is there a sigm- latwn & po*.
Compassion was. created- The Scant amount pf-bear^selling, a Sd noderisian has yet
histmy of this pntftnow has not criminal ofitence. ■ . been^ rSSfi on Vhether/t^'
been particularly happy. The The mam shortcomings lie in - Closure provi-' .
previous Securities Comnus- the area of Eatings, where coin-
sknrer Mr Uisden Mdnnes, re- .pany announcements can fall impose -snfilr
tired, prematurely last October short of what is desirable and- ' A FeHhhnseif"'
afterheaVy criticism of his lack the quality of information can f Jr^some rekSnstole:'
oJeffectiveness.- below. Something of a watei; ^
^ SS?m b broSS?SS?es 51,01
®^LX *”**&&■■ -SA®!! m brokers’ offices. not there wer e VdiSdasuxe:? s . t6sfcftter widows and - orphans
her ‘On the other hirriy-burlyofii. tough
gain an unfair advantage over flagrant operation whwi SZ per . , it remain, very .wT*rfc»f«Iara::-apart. frbm which
the other m toe battle by sneak- cent of the ^ires of a shell a^ult for the commission many ^Momihent businessmen
were monitor insider dealings znan> tfie code with/ less : than
ment that allowedit to withdraw Exchange, _,New Era,' . wen puiat | oa ^ takeover . mOTes, ; re ™ ec t. - --'Nevertfaatera, : "once
its tender offer if it obtained bought by Mr Qmn Pui-cbung- possible compromise maght introduced, regulations have a
enough shares m the market The Conn^^ tdd to to be . private disclosure to the ; ;Way pf.^anding/and in this
the milHmty.^liUt wi - mV Avatinh At - naWthaM RriflnterMt
maxing mcuccuvc in this, Mr Chun man-,
summer of 1980 in the takeover aged to obtain_a Esting &r^_e - a riihple.: t^ke- hxarket^ ^re^ectaSile $aoe in
Mr Robert ‘Fell: happy with
the market mechanisms -
; Tito commiOTion was also left buy rat «e Commission, with notification oti_ caw there i&Stomg seif-interest
.ssa-jsssjjL-r sS?SiSSsS
SSJTSJSSfSS SS’SKESTl’S dS&SS-:-
and Kowloon Wharf and Go- promptly 'placed,
down Company.
that has been travelled: by stock
50 ceSte the Shares werTrtand- Octob^.for. SO per cent^as ^ —
Sunlit, the dowdess of the Sg^ tol-40 by. the end of point at win^ fuH ■ .«**aBges m
Commission in getting an in-
vestigation of leaks when the
Hongkong and Shanghai Bank
sold ' a 22 per cent stake in
Hutchison Whampoa has been a
major factor in the mdetermih-
ate contusions reached in the
inquiry. •
Mr Robert Fell, chief execu-
tive of the London Stock
Exchange, took over on a tem-
porary basis in November, and
was established as the perman-
ent Commissioner on April 1.
He says, “My aim is. to have • .
■ a s t a tut ory body that -hopefully - —
*01 produce a' ptodJC excbange THE STOCK MABlKET in Houg.
that will seo that sdlf-regulation Kong is a volatile place, hut
is self-interest I want to get much less so than it used to be. .
the- exchange working at the In 1973-74 the Hang Seng index
front end, while the commission collapsed by . more than nme-
ten.ths.-So the fall from last.
July's all-time peak of 1810 to
a low of 1114 in early October ,
seems by cornn arisen -the
merest hiccup.
The property sector dominates
Hong Kong equities, accounting
for perhaps 60 per cent of the
total So it was events and
repercussions in the property
market that produced the run
np to last July’s peak and the
subsequent slump.
A rapidly expanding money
supply fuelled a runaway
property - market , in late
1979-80, and last spring the stock
market was farther stimulated
in spite . of . the high level of ■
interest rates 1 — which were
standing at 17 per cent The
Government announced plans to
phase out residential rent
controls, while there, was an
enthusiastic response to the
issue of International City
]8 jand. sighs, of foreign
interest. J. ' ~-
At the same time as the stock
DEALERS IN SECURITIES IN JAPAN
AND SOUTHEAST ASIA
INVESTMENT MANAGEMBvJT
FOREIGN EXCHANGE
DEPOSITS AND LOANS
CORPORATE FINANCIAL ADVICE
Jardine Fleming & Company Limited
Connaught Centre, Hong Kong. Tel: 5-228011 Telox: HX 75608
Jakarta Kuala Lumpur Manila Melbourne Singapore Tokyo
1900r
150*-
1300f“
1100H
900
TOO 1,
July 31,1964 = ItiO
ir|8S0
Hong Kong
HangSenglndex
■ UJ ■ » I — i—l 1 — »— J —
-T-U
1981
i , •; . ..i i ■ ■ . /V - and: no withholding tax oh dlvi
STOCK AND SHAR^ dends for foreign. investors.
.■ Hang Seng. . Since the "property, collapst
the ratings of developers hav
come back -a long" way, as, th
nuhket has. paid more emphasi
to-ihfi quality, of earnings. Thi
; ’^6siih fhat in property a rents
• stream 4s more highly value
; Tofad -
• Index
: .turnover
(3UA4=
Tear
HKSm-
189)
1977:
6,122.
;>«£30‘.
1978
27,419 T f
( > 62A91
1-X979.
2S.633 :
.;619.7l:
m
; 95,684:.
tl2U7 - : .
1981 .
-105,987 . f
-.L606iS4. -
histoito^European-controUe
trade houses-— the “ Hongs
market was reaching its peak,, extent of cross shareholdings Utfl
the gap be»tween US. and local within the company sector. ' ou ti»eriranned.
interest rates had widened to Tb'e Hongkong and Shanghai Property men behev
S* percentage points, and toe Bank, for ^^§e, .o.wns flQ per Jjg ^
currency was coming under cent of - toe Hang Seng, while ^ l eaxs before “
extreme pressure, 'm . trade- Cheung Kong owns 42 per cent
wel^ited todex (rfJ^ IIong of Hutchison Whampoa Jar- f?
Kong dollar feU from. 88.9 at dine Matoesou: holds a^net 35 per ^ cf Wrfr, S
toe beginning of toe .year to cen t of -Hong Kong :Land, which
8L2 in September: • '• ^ tu^ Sl^per of growth trend far toe near tern
The impHcations of this were Jardine Mathessn. - And so it . r° *® r . t f iere i®® relative,
absorbed by the stock market goes nit This factor may reduce 2
from August onwards, with a the size of thejnarfcet by 30 per. sect ® r ^ but “
pMticulaxly severe collapse in cent . - ; . - new attitude, to earnings quaU;
September. The Government Meanwhile, ■ the speed of the ™ a 7 encourage -mw* ^to come '
pushed through the anticipated eotHKHnic growto since the 1950s .tS!
mekm that the foundais -«E
many .major companies retain .fjj* * “2J
«v,7»tTYiiK»i«T. stakes: - So toe 2 0 ? 1 P^P^ty back to manufT
tnrrng.
So where does the market i
SE TRENDS ‘
DAVID FREUD
controlling
number of free shares is more
limited than it looks. • • • ' fnm . The Rong ^
_ Information is poor, and the economy may be slowing dov
; ; ■ company accounts • can _ . be by lts Standards, bmt to
stm meaj18 an officii forecast •
corrective measure in October, this year. In fact, growing pr
when it “persuaded " the banks j tectionism in the develop*
to raise prime lending rates by . world, over textiles for instant
2 points to 20 per cent .... may.mean thar the outcome
The property, market, which SsSi-B^Tati^ f^erbelow this. Neverto
had come off the boll by the less, the economic backgrom
be^nning of last year, -stopped co *ff dered u
dead In its tracks. Developers ^ ^ f healthy. However, toe proper
began to cut prices, ribeitln a -IIjJS!?,, ^ a T V, P® Tt | calar market is unlikely to provi(
disguised way, and a couple of indivIdu fJ ls ,h a ve a lot of power, much excitement in the she
dSTSledto tal^SiriS ‘ m l£%Le° weight of new
?£2Z£Er m * *"
pha«SSe“.|S.ffi 6
SS - ,ea %gi! d TP *! KmXb supply
year did pS£ d S
Sas^&w-srssSarts -afsKStSJI
wasp? JJM —
if 1 ? T? 64 unless 1 tfaer f under-utilised assets, generally Meanwhile, institutional llq
3LS S35gr wiUl «. m ttfrSFSSSS
"T^nrep^, note, how- ? S
compares with 8D per cent in exchanges round toe WorlZ w^ratoe/ 01 !^ 2 SSJ
1981, and at- tois -level toe Moreover, since toe Market ii wheto^thrr^T^ Sri
pw^eettre market p/e Is 3j w otm dominated hy , indMduais! ^ ^at
so, whale the prospective yield there . tends to be a much prices T “* avei y tayouru
is 7 per cent -greater variety of sentiment - It is"noticeaM«» ftiif mv
Cta the other hand> the 19SJ than, for instance, in London, . lapses have been taken 35 ^
profils are still underpinned by where institutional dominance wM^Bate buying opportun
f er ^ wtll. be reflected , erowinfr, nevertheless, and may “1
In the profits of developers. So now account for 30 per cent of market- was fuelled bv t
oyeroU earnings may drop, back activity. Last year turnover moves by Hong Ktme lind
Dependence on .property market capitalisation, although and power utilities
developers is not the sole- cause on - the first -quarter of 1982 . - so, at current levris. it lot
of the Hong Hong market’s activity , has been running af as if toe SSTkoS
volatility. Choice is narrow, less than haH this level. found its but
^ sto ®*f E ■ The “g \^el of turnover is shock ooU^^Xe'Sww
orfy perhaps 15, are freely encouraged through a 05 per . sector -laterthls sunmiw^
traded- Moreover 1 , whHe total cent brokers’ commission, while autumn— widdi cann^beru]
mwfeet ca pitafa sation is stated -stamp tax on each transaction out— could deal toe me
to exceed HK$200bn, iiz reality lx only 05 per cenfMeahwhll'e favourable -sentiihent a eava
ft Is much smaller, due to the there * is no capital- gains tax "blow. ■ *
"T
21
^ l
Financial Times Monday June 21 1982
I? ...... .. . . . ^ .. .
A
, - c >..• ■..
■i-;; ;
■- a*
H
: »ri
r«jn». “
:=l75*36
- sSS?*
••• a*
-4-
l
*
w
£
\
-n
J SflBfiJ
jns-Indal j
-'•-n't® ■-
jr--.5t.JHT: : c
-
;r.o:;s£ ?•■
. i '..rruis "■ -
'Cv£4 : -
,r ?&•*, ~
-
\:V2» as’
'..-•rzrL
; r7 =*3«
■ i .f , A'K3 f
; r : ’ :-_c^ :
. = .,:-j spSj
- .v “ iSii
;r •;» R‘
u.yr £
V-WitfS
-J filil
:
. (ff
.?£5£
■ ‘ ,. i :*
;o3&^.
sir 3*’ Z.
V HOS? ■ -
-. » - ‘
■ :* .
■ ■ '€■- ■- *
V-r?
• . ■; y*
: i$. :
’ " : ''n
V? 0 ^ 1
,, (-& ..
-'.Sf
;s fflUi' -
;i r?y- ..
' .v'V'tfC’..
• ■. i-'*' , :r •
• ■ ;■ ■ i"
. . • i” v •
••■• ‘ ..-.if - - ■ ;
■ : ' J'.’S ® *' f
’ •' ..’r: V -,-
• • -
■: ■■: •.
.. . .'tu*' • .
. .>’■•.= •■ l
' ■; ■$&'.' '"'i
-• 30 1 - ■', # ,
■'V-jV 1 i- '
' > S*’"V-
•>* '‘j. -.
V ; ^#f '.
Oil Exploration
Shipping
wW M
Investment
\ 1 uj*'
Travel
Transportation
Commercial
Food & Beverage
Ground Handling
Pest Control
Department Stores
Since its inception iii 1979 ? the Carrian Group has become one of the largest and most
progressive international conglomerates in Hong Kong.
As of December 1982, net assets of Carrian Investments Limited, the public arm of
the Group, totalled HK$ 3, 378 million.
Diversification has become one of Cardan's greatest strengths, and one of the_main
reasons for its continued success. From a locally oriented property-based company in
1979, the Group has expanded into shipping, insurance, energy resources, transportation,
tourism, travel, international real estate, retailing, catering and other investments.
• The Carrian Group's varied activities have now taken it far beyond Hong Kong.
' Regional offices have been established in Malaysia, the Philippines, Singapore, Thailand;
Japan and- the USA, to oversee existing
operations.and seek out fresh investment
opportunities. . [| L THE CARRIAN GROUP
,:lfymwould like to receive a copy I I Canian Centre, 1 51, Gloucester Road,
of ourannual report, please write to the H Hong Kong. Tel: 5-831311 1
address stated. \ ' Telex: 63392 CARIA HX
5
UMIH) OVERSEAS
BANKGBOUP
FINANCIAL
HJGHUGHIS
PROFITS AFTER TAXATION (SS’OOO)
The Group (after minority' interests)
The Bank (UOB)
1981
133,407
91.181
19§0
92,332
57,854
Increase
41,085
33.327
DIVIDENDS
Final dividend of 10% less tax on the enlarged capital of SS394.5 million. Together with the interim
dividend of 8% less tax, the total dividend for the financial year would amount to 18% less tax.
BALANCE SHEET AS AT 31 DECEMBER 198 1
LIABILITIES
S$’000
ASSETS
SS’OOO
Capital & Reserves
973.903
Cash, Balances with Bankers
2,359,128
Debentures
102,450
and Money At Call
Total Deposits
5,341,819
Government Treasury Bills
268,114
Other Liabilities
1,063,571
and Securities
Acceptances, Guarantees
Investments
397,485
and Other Obligations
Loans & Advances
3.977,790
On Behalf of Customers
2,191,494
Other Current Assets
Fixed Assets. ,
Customers Liabilities for
244,948
234,278
.Guarantees
liieations
2,191.494
Total Liabilities
9,673*237 Total Assets .
9,673.237
A apt of the UOB 1981 Amaml Report is mukbli on request
The United Overseas Bank Group (comprising United
Overseas Bank, Chung Khiaw Bank and 1 Lee Wah Bank):
more than 40 years of experience in Southeast Asia, over
80 brandies in Singapore, Malaysia, Hong Kong, Tokyo,
Londoftpnd agencies in New York and Los Angeles.
Head Office: 1 Bonham Street, Raffles Place, Singapore 0104.
TeL 919988012555. Tefcac RS 21539^1804.
Cable: TYEHUABANK
Tokyo: New Kokusat BuSdiQR, 4-1. 3-Cbome, Manmouchi.
Qriyoda-feu, Tokyo. Tel: 03-2 1&4251. Telex: 22178.
CaWe: TV’EHUABANK.
London: 2 South Place. London EC2M 2PR. TeL- 01-628-3504/7.
Telex: 888278. Cable: TYEHUABANK.
Malaysian Central Offices: Chung Khiaw Bank. Bangunan
Lee Wah Bank. 10-11 Medan Pasar, Kuala Lumpur. Tel: 87761 .
Telex: MA 30232 Cable: CHUNGBANK. Lee Wah Bank, Bangunan
Lee Wah Bank, 10-11 Medan Pasar, Kuala Lumpur. TeL 8835L
Telex: MA 30265. Cable: BANKLEEWAH.'
Nw York: 130 Liberty Street, 27th Floor, New Yofk.NYl0006.
TeL 212-7754)560. Telex: 2322G5. Cable: TYEHUABANK.
Los Angeles: 91 1 WSshire Boulevard, Suite 1800. Los Angeles,
California 90017-3478. Tel: 2136238042. Telex: 6831011.
Cable: TYEHUABANK. m.
Hoag Kong: 34-38 Des Voeux Road Central, Hong Kong.
TeL H-257171. Telex: 74581. Cable: TYEHUABANK.
#
UNITED OVERSEAS BANK CROUP
Trade Finance Leaders in Southeast Asia
US38/82
Size.
The Savings Banks Organization is
Germany's largest bank grouping with a X.
/ combined business volume of over DM 900 billion
a market share of some 40 per cent - and more than half \.
/ of the nation’s total savings deposits. Operating within the \
/ system are 598 independent Sparkassen and 12 Landesbanken, as \
/ well as 13 0 £FentiicheBausparkassen(PublicBuildingSocieties),which \
/ together maintain 18000 offices and employ a staff of over 200.000. V.
/ Scope. \
/ The facilities and services of Germany’s Sparkassen permeate the entire eco- Y
/ nomy, from the largest cities to the smallest rural areas. Together with the ^
Landesbanken, which have their own offices, participations, and correspondent
links in the world’s major financial centers, the Savings Banks Organization offers its
clients a broad scope of international service capabilities.
Legal Status.
All members of the German Savings Banks Organization are public-sector financial
institutions. The liabilities of the Sparkassen are covered by the cities and munici-
palities where they operate. In turn, the liabilities of the Landesbanken are covered
\ by their state authorities and by the regional savings banks organizations. j
\ Service. /
\ Unlike savings banks in many other countries, Sparkassen in Germany /
\ operate as local universal banks, providing both commercial and invest- /
\ inent banking services. As an integral part of Germany’s traditionally /
\ export-oriented economy, many Sparkassen transact considerable /
\ foreign business. Their facilities typically include letters of/
\ credit, documentary business, payments and collections, /
\ and guarantees. For larger scale foreign financing, the yZ
\Sparkassen often work in tandem with the
Landesbanken, which concentrate on
wholesale banking.
The 4 basic strengths of Germany’s
largest banking sector.
The Landesbanken, which act as central banks '
for the Sparkassen in their region, provide multiple
.wholesale banking services, ranging from
commercial and public-sector lending, project
finance, and foreign' trade finance to portfolio
management, security dealing, and international
finance - often managing or participating in
syndicated Euroloans and Eurobond issues. For
funding purposes, the Landesbanken are
authorized'to issue their own bearer bonds.
For more information about Germany's largest
banking sector, just write to:
DEUTSCHER
SPARKASSEN- UND GIROVEMBAND
Simrockstrasse 4
P.O.Box 1429
D-5300 Bonn 1, West Germany — ■>
; Financial Times
HONG KONG X
the commodity exchange tradeiii^Uon futures \
How
War.
gave
AFTER A VERY rocky start five
years ago, the Hong Kong Com-
modity Exchange has now begun
to pay its way. 1c still remains
small by the standards of, for
instance, Chicago and is over-
reuant on business generated by
Japanese members. Neverthe-
less, with contracts . ui froth
.soyabeans and sugar' firmly
established, the exchange Is now
vigorously investigating plans to
, introduce platinum contracts
and a financial futures £-arKet-
- On a less happy note, last
September saw fee abandon-
ment ot trade in cotton futures
Soyabean
Sngar,
Gold
Cotton
Overall
1 19,534.
» ■ ~ ~ ' w > ■ 1, 1 .1 r . members of 'fee. exchange since U
COMMODITIES 1 TURN OVER i v- . : "into Japan. 1 So far fee only J ^
(in lots) % . V : ’• '-/place .to offer a contradf iS New i
,r •• ’rV : ••• • Ybrts whitA fa-ineonventent fori
1977 1978 1979 . , 1989 - ' 1981 .timing reasons for fee Japan - 1 ~
-• Q(m ..-'i7A4gi'. 442 70R ese. The exchange is investigst-l
: .. iff: ing whether phyricaLxraaabiliiy sP*
L41Q 2,923 199 : 17^9». ; . llftSM . ^ gpedficaScan S**
— -'. l — ~ — • - -r- 26,674 ; 32,710 teed; If it is - satined' fee' ton- ;
9451 6,908 507 14,630 - 15^14 P ™* '.’.W s ° -. '•/' ” J
,,m MP*
Source: The Hong Kong Commodity. .Etchange. - exchange haif set up a-Worldng ^
■" — ■ . .-.-'--pdhy' tolnYesfigatepbssibJIlties,
'•••• '<• • but. feeir' findings sb.ftf'ard at 3#'-
. .. . • ities. While this' may be change - an early stage. ' ' -- ^
9451
10^61
: — although the marJcw remains The most important ,thing' in& fee Japanese / aufeorities - : 1 ™^ v»rv dosedv W-
in suspension rather than about these, two. contracts was axe making, rfhe'.: that - st - :
; Closed — while a. series, of that it put the exchange's is-eenduhfed at home; - • wh^re rfiA 7 I^hdnn -
Changes aesignea to make the finances on an even keeL The Ust year a private gold feteSloriaLFLna^ - Fm4e 5 vi
£!L 2M 2SSS %,
.Closed — while a series of
Changes aesignea to make the
goia contract more attractive
nave so lai railed to stimulate
inLeresL , . „ °? v lls stari ' up March. Against heavyweight -alsavratchmgthe 'progress ofits ^ I:
wuon lutS« ^ compieteJy. competition, the Hong. Kong .'main .rival in the South Pacific ■ J: ^
if-L Last 3W feud income was market has got nowhere. Only Singapore, which hasTn itSriurri L -.r
contrau. aince some 8U per cent HK$8.1m, and while the levy on - 15.914 contracts of 100 ounces established a workihg '-party on
.01 wunu raw couon production contracts was an important were traded , over fee whole of financial futures:': ■' ^V-' : 'r
was nought in the region, ihe source of funds, interest receir- 1981 and the daily rate is even . “ Th i. ; - i*' ter +wt
luea-waa tn oner manutacturers ab i e took over as the most lowcer. ' While the Japanese ^
;a . neugmg opponumiy, aomcr important contributor. Overall brokers feel inhibited about 5-
Uuhe idat lniual rebcsich mdl- lact vmt ranvaianfttil WnM ’ nr'fr.nir Vnnrr . OD CuCTfilKaCv.ilM.' US'
if! &
managed to pay off its start-up
expenses completely.
ining uiat imuai research indi- expenses last year represented trading in gold in r ftong. Kong, ?
caiea uiey would welcome.
in practice toe spinners c-jn-
tinueu 10 prezer taxing uusir
Uivu price risiva, rainer than
only a quarter of total income, there - is -
• Wife two relatively success- attracting ,1(
ful contracts behind it, the shape^of tv
exchange has been looking for
trading in goia ur nong ivong. intereat" ^ Hfinc "Kohl , ..
afSrtirm 1i ™ eS " ^ Jill* ,
attracting .local mvestora in fee . ^ . camot bte' the ^ equtvaien p 1 ' '
shape of ' two spot markets. - S" ? ttS^Qposed^--Sjt-Idg« ^
oppmunmes. SUcI the
miniiiiYe xor tiiem to cjii nese are .known.' the .world
neuge, as in i>ew lork, wnere ovcr fQr heing inveterate
oau^S. Look a aim view or a pm- gamblerSi it ^ n0 S urprise that
nei^ who- jert inemseives f he ^Sage* has never felt a
exposed l0 - fe® l^k' or volatile i af ,v n f gnt'enlators. As -well as
_ v,> * • '* ^tmtFaei^in'rLondofi; .
Gold and silver -■ - rife mrnaher^Mn i ■**1 a
Chinese are .known the world ■ * ; . dTa ■/ Zi ' Fi
over for being inveterate .. The Chfe^e;are:attrected -,tq- ; -^«*Pf^gJitP^t^«^-| ^
gamblers, it is no surprise feat the Gold: and Silver Exchange ■: ^
the exchange has never felt a GCam Ngan) ; which Vis A unregu v ;gee^ty **'*■
lack of speculators. As weU as Uted
price changes. .
In Hong Kong fee market
became nominaied oy a single
merchant ana this., may. , have
uigntened others away. So, last
SKjpttimoer ouoi Landing conixacts
Were . balanced out. Ait 'me
requirements , lor a market are
reuuueo, however, mciuamg an
ajt;ciJL in lexas and it cotud ue
I'c-acuvareu uu . aeinanu. rue
.cjkeiiau^e is Uiveauyaung ways
Oi UOJLUg bO.
•cHanae ■' ftaandial futicres; ittleasTnot i *-
Second contract
bugar was the second .con-
tract lo ue introduced, in.
i>oVtuxu>er I0i7 aua again trad-
ing was extremely thin xor fee
next two or mree years. The
pro olein was mat while Hung,
jxodg uad and has plenty or
individuals prepared to take
speciuu uve positions, there was
a shortage ot commoaily users
wanting to hedge.
VviUi this piooiem in 'mind,
Mr I'eier ncaies, the cnauman
or fee exchange, invited a
delegation oj Japanese OroKers
to uumer; "‘iney were ‘a
signuicanL proportion of our
to Lai membership — «lo out 20 per
ceni-^d 1 asxed inem wnat
they feought fee exchange coma
do for idem.
-They-" formed themselves
into a group of traders and said
fee exchange could usefully
develop a soyabean market.
. There was a large physical
demand in the region, particu-
larly rrom Japan. Meanwhile,
they wanted fee market
organised in their own way."
no in lVovemner lit/it a soya-
bean contract was initiated.
| instead ot open outcry, in which
individuals * agreed various
deals, fee market was arranged
lq! accommodate group trading,
in which a single price is' estab-
lished in a similar way to fee
London gold fixing, at lour calls
a day.
The contract was based on-fee
60-kilo -frag used' on the Tokyo
exchange, and fee calls'. were
timed to succeed (hose in Tokyo.
The price in. each Call 13 estab-
lished through hand signals —
the system developed in- Japan
tb cope with orders coming
through oh headphones. "
. ; The Japanese find, fee market,
.conveniently, situated 10 collect
orders through the region. The
iax regime Is less onerous than
in Japan, and fee timing of the
calls gives the 'maximum -scope
for arbitrage opportunities. So
fee market took off.- Last year
442,708 lots were traded, a gain
of 150 per ient oh. 1980. This
year volume has : been running
at twice ihis rate, bringing
.Activity up to the levels seen in
the Tokyo market itself
although Chicago remains many'
femes, busier.
' The soya market gave a boost
to the sugar contract, which had
by then more or less died on
its feet and in 1980 the sugar
contract was re-established to
allow fee group trading system
fee Japanese brokers preferred.
Again this produced' a very en-
couraging trend, and fee
number of lots traded went Up
by S65 per cfenf last ytar to
lack of speculators. As well as Uted and where tax coRec^ou ..« I, ^ t:r -: :
fee Chinese population of Hong is accordingly not strictly en- ^tgange-t^make m ^ronaraj
Kong there is plenty of interest forced. -Even bigger is fee .
elsewhere in fee Pacific basin, extension of fhb Londonniarket t° ent tteiy . x|ew-| aaH-
from individuals and companies run informally- by - branches of--, memfrersmp -to --pa^pcipwe. .
in Malaysia and Indonesia. The London- InUIion 'dealers, known. h; -The jirpbleai' is. fee convfc£
exchange has had a great deal as the Loco-market. ; ---/of that Hi London, where fed
of difficulty in attracting their The 'cwninodity exchan^ has ' ^ 'iikoiy .‘to' . be^ : plenty
counterparts, hedgere. Who wish . made various cfcanges to .'its ' ; .Aed^Ms but posaibiyja shortw
to cover risks. ' > gold : cbntract to. “make It more of speculators. In ' Hong Kof
While membership ' of the attractive over fee past year'^ lf ' feefe^shcHrid fre no feortage/-.
exchange runs -to' about ISO, introduced same-month delivery; speculMor^-^^ on- the fade-
only a third of these are active and allowed traders to take out , *•. fe®. Kong Lon®
on the floor. The rest have in cash part of their paper financial futures markets cou |
obtained membership as a way profits without .closing a con--; prove a natural nt
of gaining acceptance in other tract, to. encourage the- aritra-. - .There - are. .also; hopes. '
commodity exchanges round the geur. So wri the required im- finding hedgers in Hong Kol
world. Of. the 50 or so active petus has been" lacking, and fee ’ itself, .which has a Wide spe
traders, 28 - are .. . Japanese exchange- is dokoiidering what trum of trading busmess
world. 0£-.the 50 or so active
traders, 28 - are ; Japanese
brokers, who still dominate fee further adaptations To make. - .exposed to the
trading. Against this back- There ‘Is .more' prospetT of a average currency vagaries.:
ground. It is perhaps not sur- successful- - platinum contract fee Houg Kong dollar. Whet
prising feat the gold contract developm& however, and. .Mr- they will prefer to take pii tt
introduced in August 1980 has Scales, hopes -feai one nmy. lfo. own risk-^ike the. cojttqn:^
not been successful introduced before, fee end of ners—pnly time wfe 1 tell
introduced in August 1980 has
not been successful.
Gold has traditionally not the year. The contract has been
been high on Japanese prior- proposed by some ' Japanese
Davi«T
UB-AF
CBF^CZJUJF^
$ , Sfi '
s ^
f-
■' C' 1 ”-
. a. .‘-K 1 ;. .
Financial Times Monday -June 2 i 1 US 2
HONG KONG XI
FINANCE
W1NSOR INDUSTRIAL CORPORATION
Main operation stays local
Wlnsor Industrial Corpor-
ation is the largest publicly-
traded textile company in
Hottg Kong, it is also" one
flt the few vertically inte-
• . ' Sraled companies, producing
' Z*™ 8 ’ fabrics and garments.
■•-•The chairman. Dr T. K. Ann.
; - was an ■ import ^export trader
u *0 Shanghai — where he
■ wrote a university test book
■in Chinese on trading —
• before moving to Hong Kong
,in 1948.
He set up Wlnsor with a
group of friends In 1951. and
the company went pnblic in
1969. The cares of running
a successful company have
not stopped him writing, how-
ever, for Dr Ann is midway
through publishing a five-
rolume work Introducing an
integrated system br which
Westernrrs can learn Chin-
ese.
The company’s growth has
been rapid. In 1969 external
sales were HKSSOlJIm. rising
to HK$lJ2bn. Net profits hare
risen even faster. from
HKS14.ini to HKSlOTm,
helped significantly by a
series of acquisitions.
Even in terms of earnings
per share, however, growth
has been running at 151 per
cent compound annually.
Through, the 1970s Winsor
has been moving up market,
and now is involved in areas
like fashion designer clothes.
The recession round the
world and export quotas have
helped to produce a slow-
down in . the last couple of
years. In 1981 there was a
decline in profits for the first
time since 1975. The com-
pany is caught between rising
costs in terms of rents and
wages and stagnant prices.
Dr Ann points out. how-
ever. that even last year the
return on capital was con-
siderably higher than that
achieved by competitors in
the U.S. and Japan. The
retnm on capital is in fact
still above 20 per cent, albeit
in terms of historic costs.
Dr T. K. Ann. chairman:
expansion reived back
Nevertheless, it is notice-
able that the uncertainties
over the future and worries
about protectionism in the
West have reined hack expan-
sionist plans in the group.
Capital commitments in the
current year are down from
UK912.tim to HKS3.3m.
admittedly after a period of
high capital expenditure... At
the same time the group last
year closed down one of its
spinning and weaving
factories, and is redeveloping
another site in a joint venture
property deal.
. The group’s style is to
operate through six independ-
ent subsidiaries which are
responsible for their own
operations. Intra-group trad-
ing is conducted at arm’s
length prices. Winsor has
recently extended its opera-
tions in Macao, where wages
are lower, hat (be main
operation is likely to remain
Hong Kong for the foresee-
able future. As Dr Ann points
out: “None of the companies
which have switched their,
operations overseas have been
very successful.”
The Vickers da Costa Group have
been active in Far Eastern stockmarkets
for oyer a decade and Continue to provide
an extensive range of services for
international institutional, investors
JARDINE, MATHESON
End of difficult decade
THIS YEAR Jardine. Matheson
and Co., the leading Hong Kong
business celebrates its 150th
. . anniversary. Throughout its
history rhe company has been
closely involved in rhe key dev-
elopments in Hong Kong. It has
been publicly quoted since I96L.
and still maintains its original
Hong Kong interests in
; shipping-related and financial
i services.
I The past decade, however, has
1 been difficult for Jardine. it
| started the 1970s as the acknow-
- ledged doyen of Hong Kong
> . companies; now it is an also-ran
in terms of market capitalisa-
tion. The reason lies in the
profits record. Jardine's earn-
ings per share have risen by a
relatively low 318 per cent since
1972; by comparison those of
the associated company Hong
Kong Land have increased
. nearly eight times.
In the 1970s Jardine pushed
through an aggressive diversi-
fication programme outside
Hong Kong, and accordingly
missed out on the sharp profirs
growth of the domestic property
market. Moreover, the returns
from the foreign acquisitions
failed to match their promise —
at least in the early years. Mr
David Newbigging. chairman of
both Jardine and Hongkoog
Land, says: “ With the benefit
of hindsight we expanded too
ra pi dly . Su bseq ue n 1 1 y we
actually mored back into Hong
Kong.”
The main diversifications
abroad were a Hawaiian sugar
company in 1973. which last year
made a loss: a major interest
in Rennie* Consol ia ted in South
Africa in 1975: and a minority
shareholding in Transporting
and Trading Company in the
Middle East in 1976. In Hong
Kong the company bought a
substantial construction and
civil engineering group. Gam-
mon (Hong Kong) and 75 per
cent of the Zung Fu vehicle
trading company. These two
have tended to perform rather
better than the foreign
acquisitions.
In fact, with the properly
boom well off its peak, the rela-
tive quality of -Jardine's profits
might have allowed it to make
up some of the lost ground in
rhe coming years. However, it
may find itself hobbled by a
decision taken in 1980 to build
a 35 per cent stake in Hong-
kong Land. This had led to
high capital gearing, which will
reduce the room for manoeuvre
and will take some years to be
brought down to a more
comfortable level.
At the saoie time Hongkong
Land built up a 40 per cent stake
in Jardine. and critics charge
that the reason for the develop-
ment of the cross-shareholdings
was lo establish a mutual
defence against takeover
attempts.
Sir Newbigging denies this
and claims ihai i he liming of
the share build-ups was coin-
cidental. "Jardine had a long
relationship with Land, yet over
the years (he shareholding
declined to less than 5 per cent.
So Jardine decided as a matter
of policy to build up the share-
holding again. Meanwhile, the
Land company's strategy was to
broaden its operation a bit from
pure property to other interests.
So it decided to invest in
Jardine.”
Whatever the origins, the
extern of the cross-shareholdings
requires that investors master
rhe intricacies of accounting
theorist Professor Bogie's
patented equity accounting
method for dealing with this
eventuality. On their own. rhe
’’ clean ” profits of both com-
panies would total HK$1.37bn
Mr Da rid Neicbigging.
chairman: expanded too
rapidly
after tax and minorities. In
fact, the stated total runs to
HK$2.I5bn.
This is because Jardine's net
earnings of 8723m include a 35
per Cent share of Hongkong
Land’s $1.4bn. which includes
40 per cent of Jardine's S723m:
and vice versa. The swelling of
the simple ’ clean’" figures is
not so reprehensible as at first
it appears. The cross-sharehold-
ings mean that profits are
ultimately attributable only to
the outside shareholders of each
company, and the earnings per
share should • be increased
accordingly.
Vickers da Costa
Vickers da Costa Ltd
Rep* House
King WifUam Street
London EC4R vAR
and The St-«cfc Exchange
T elephone o 1 -62? 2 494
Telex : 880004. 888500
Vidian da Com a
Securities Pi* Ltd
Sui re bo;
Singapore Rubber Hoit-e
14 Collyer Quae
Singapore 0104
Telephone 2245033
Telex. 1020976
Vickers da Costa & Co
Hong Kong Ltd
2802-2805 N’e»- World Tower
i6-i8Queen« Road Centra]
P O. Bex ;qo H'»ng Kong
Telephone. 5-251361
Telex MX 74562
Vickers da Costa Ltd
Tokyo Brandt Office
Tokyo Tatcmo no Daisan
Yaesu Building <th Floor
0-0 Haichobon r-chnme
Chuo-ku. Tokyo 104
Telephone: 553-9211
Telex: 252-3706
Vickers da Costa
Securities hr.
61 Broadway
New Yorx- NT :osori • ■
Telephone. 212.742-9^00
Telex :6494s A
Vickers da Costa Ltd
Philippine Representative
Office
R.xjxc 2ig. Makati
Slock Exchange Building
Matuu. Riral
Philippine*
Telephone: S4-50-61
Telex: rs 3635'
Vtcknx da Cmu Ltd
Members of The Suck Exchange. London.
Vickers da Costa Hong Kang Securities Co.
Members oi' the Hong Kang and
Far East Stock Exchanges
HUTCHISON WHAMPOA
A strong balance sheet
HUTC3JSOX WHAMPOA has
root! stretching back to the
earv 19th century, and has
beej rescued twice from
• finatial disaster by the
Hotjkong and Shanghai
Baong Corporation, once in
theksl century and on the
seejd occasion in August
197] Nevertheless, it now
had one of the strongest
baBce sheets of the major
conanies in Hong Kong, and
it 5 lgh cash flow will allow
- it undertake a formidable
dewpmeni programme
thighout the rest of the
deie-
lt i «n trolled by the fast-
•gr ng Cheung Kong
pi rty group, which now
b< a 42 per cent stake,
a f the transfer of The
„ B s 22 per cent stake in
Sunber 1979.
In late 1960s Sir Douglas
C e. the chairman of
Hiison International, as it
w hen called, went <m a
b ? spree. From only
B 3m in 1964 the com-
p i issued capital ex-
p d to almost HKS250m
b : end of 1974. and net
p rose from HKS10.8ro
it 5-66 to $I36m in 1973-
The purchasing of assets was
particularly heavy through
the period of rhe Cultural
Revolution in China. In the
words of Mr John Richardson,
the present chief executive.
”He went long when every-
one else was going short." In
retrospect the most important
acquisition was a controlling
stake in the Hongkong and
Whampoa Dock Company.
Over-extended, ihe 1974 reces-
sion caught the company in
a cash-flow trap, while par-
ticular problems emerged in
an equipment • suppliers
business jn Indonesia. With
pressure emanating from
British and U.S. banks. The
Hongkong Bank made a
tender offer for 30 per cent
of the stock for HKSloOm
and a new chief executive.
Mr Bill Wyllie stepped in.
The policy W3s to sell excess
assets for cash — with one
important exception. The
stake in the dock company
had been eroded from 45 per
cent to 28 per cent: now the
company exercised an option
to build up its stake by a
further 14 percentage points,
and managed to buy a further
9 per cent without alerting
the market. In 1977 a full
SWIRE GROUP
merger was engineered.'
The company now had enormous
surplus land resources at a
time when the property
market was poised to shoot
ahead. So in recent years it
has undertaken an extensive
property development pro-
gramme. selling off offices
and apartments while retain-
ing retail space to establish
a rent roll which this year
should produce profits in the
region of HK$200m.
The company owns three con-
tainer berths, harf the total
in Hong Kong, which is also
producing healthy profits.
Minority stakes in television,
the Cross-Ha rbour Tunnel
Company and Consolidated
Hotels have produced good
cash returns.
In the past couple of years the
companv has used its surplus
cash to buy in minorities in
irs trading and retail division
and in quarrying. This pro-
cess has now been more or
less completed and the
balance sheet shows cash net
of all debi of HK$135m.
against shareholders' funds of
HK$3.7bn.
A considerable development
programme is now contem-
plated. On the property side
High capital gearing
By lie standards of
Jar Matheson and
' Hu on Whampoa, the
Sw >roup is a newcomer
to £ Kong. The group
believe! oping its shipping
aep “s in the East in the
• T* ,l was °° l un,il ,hc
bfidpg of the eentuiy that
ilMoo dockyard on Hong
Rglsland opened lor
]hc|vate parent company
{ tbtgwire group. John
Xre id Son s, is based in
fidon^it has four main
bratiri arms, based in
bdon.Jokyo, Hong Kong
U Austaiia. Of these the
/ft implant Is Hong Kong.
Wch coiyrises about 55 per
fnt of tl^ assets and profits
I the roup. Here the
iterests tare controlled
trough til quoted company
/wire Pacqe, of which the
/arent hold nearly 48 per
ten( of the bung equity.
' Tb* 1946s \eait the group a
savage blow. At the end of
the Second World War more
than half the group's ships
were lost and (be Hong Kong
dockyard and sugar refinery
were left in ruins. The Com-
munist revolution meant the
finish of the Chinese river and
coastal trades and the loss of
extensive properties on the
mainland.
The initial work went on
recreating the shipping and
shipping-related businesses
the group bad traditionally
hecn in. At the same time — : ...
in 1948— a controlling interrat
in the airline Cathay Pacific
was hough L The next diversi-
fication took place in the early
1960$. when the company
entered the homing business.
In the 1979s the group
began building up its offshore
supply fleet, which is now one
«r rhe in largest in Ihe world
and operates in the Gulf, West
Africa. India. Indonesia and
Kninci. In Hong Kong, Swire
obtained two of the six con-
tainer berths developed in
the New Territories, while
more recently property has
become an increasingly
important element in total
profits.
The group’s Ilong Kong
land hank from the old dock-
yard days has given it a head
start as a developer but it has
been hamstrung by shortage
of cash and so has tended to
sell the hulk of Its develop-
ments- Last year within
property profits of HKS588m,
' only S92.3m derived from the
rent roll-
This year, with the property
market well down from its
peak. “ property profits will
be lower" according to Mr
Duncan Bluck, the chairman
of Swire Pacific.
Meanwhile, capital gearing
is fairly high, and last year
there was a cash outflow of
HK$I.3bn. In spite o£ a
property revaluation, net debt
the Huxighom Dockyard Re-
development on the Kowloon
peninsula may take 10 years.
The company is also consider-
ing whether to make a
further heavy investment in
more container berths — at a
possible cost of HK$1.5bn. It
is aiming to expand its local
retailing interests, in super-
markets and chemists. In
. spite of the ambitious scale
of this programme, it could
well be financed out of
internally generated funds —
depending on timing.
Meanwhile the stock • has
recently been one of the most
buoyant on the market.
Appreciation of the sound
financial position and growth
prospects has probably been
a secondary cause. More im-
portant has probably been
speculative interest over the
possibility of a full takeover
by Cheung Kong. Here there
may be disappointment The
Takeover Code allows 5 per
cent of a company to be
bought each year. Cheung
Kong could bump up its slake
beyond 50 per cent within
two years, without making a
general offer to all share-
holders.
SCSNBfc
Mr Duncan Bluck,
chairman: tourer property
promts
last year moved op From 52
per cent Of shareholders'
funds to a little over 70 per
cent So last autumn, when
unit sales at Ihe group’s big
redevelopment at Talkoo
Sbtng came in a virtual stand-
still- Swire uas ic.no position
lo hold out. and cut its effec-
tive selling prices.
Grindlays Asia Limited
Merchant Bankers
Grindlays Asia Limited provides merchant banking services to governments , institutions,
major corporate and individual clients in Hong Kong and die Pacific Basin region:
Capital Markets
Management, underwriting and trading of equity
and debt securities . .
Corporate Financial Services
A till! range of financial serv ices tor major Hong
Kong corporations a nd offshore fi nance and
advisory services tor clients throughout the
region.
Export Finance
Finance under ECCD and other government
export credit schemes for capital goods and
equipment. .
Investment Management *
Discretionary management of equity, debt and .
money market portfolios in major financial
markets.
Leasing
' Tax leverage leasing, financial leasing and lease
packaging for the acquisition of major items of
capital equipment.
Project Finance
Venture capital, debt finance and advisory
services tot industrial and natural resources
projects.. -
Shipping Finance
Specialised financial services for major ship-
owners and companies operating in oftshore
energy related industries. '
Treasury "
Deposits, foreign exchange and trading in a
range oi currencies and money market in-
struments.
Grindlays Asia Limited is a wholly owned subsidiary of Grindlays Bank p.Lc. London. Together with
Grindiay Brandts Limited In London, and Grindlays International Limited in Bahrain, it forms part of
the Groups International Merchant Banking Division, providing a rang: of specialised financial services
to clients around the world.
Grindlays Asia limited
14th Boor China Building
Queens Road Central ..
Hong Kong - : . . . 1 .
■ ' Tel: 5-266577 • • V :
Teioc 75132 AVREN HX - T •
Branches or Offices of die Grindlays Bank Group in the Pkdfic Basin Region:
Australia, Hong Kong, Indonesia, Japan, Korea, Malaysia^ Singapore, Taiwan.
_. 1221-"."..' "... j .
t 1 1
HONG KONG XII
PPAPPPTTt'
*. s vm^- w ;
*„«*..>«*■* ^ -*^2 SB. •. • T-' , • > ' rv-^A*- \«i
; eW ■ rvT;H-
- : -. . • - _ -
■■■■■■■ : < :■■■-> ' -■ -V. •:..*^ A* . MSK i-Wm • *. ■'•V>
PROPERTY
:v.sXv<’,; .;
Xr^i-.-V* * •.
■ • , - -' v - .' "->'* • i .•
Commercial '. Vacant at Space taken
space built . ■ end-year up as% of
(square metres) (square metres) total built
/V. - *■'••- "?**.«
<■'■. yj
>•*>•_ . •»•■ - ‘i
*»v ifcV,.
s i li| : '®?sl!
m
‘ • . •*.'■* *1 •■' rtf * ♦ W~ • . *v"-
*\ r v
' „*..•'. - >■• •* >{:
__•• ~ -- ■
• - - **-. .•;,
1978
1979 -•
1980 •
1981
1982?
Office :' vacant at
-space built •"■ end-year ... ;•“
(square metres) (square metres) %. taken up
185,400
178,300
298.700
319;300
485,100
131,000
78 , 700 .'
202.900
301.900
t Estimated.
Source: Hongkong and Shanghai Bank.
"liUnmn tfmikhi* ’- - - 1
f.:;
*r*m L _ : ■" - ' * *r
^ '■ V*
Left: Nathan "Rood, where prime rents have reached HK$ 14 Q per ^sq ft. : Abcmet tnew- ^Hke^ heeM'^^ f %i
■ Hong Kong’s commercial districtj looking toumrds 'Kowwonly ’y;; ; ^ .
Michael Cassell says the market is grappling \wife
On the next two pages he looks at major groups ahav^0gr65$
— •■ 1 ■’• . ’ ,. ;.■. 'i ", .' * Y J sj ' f-*- :< -T’; • .V5 v.« , 'J ■ .’■
boom comes tii li
In the Middle Ages “Lombard" meant Banker.
Today “Banco Ambrosiano" means the Bank of Milan
the Lombard City of St. Ambrose and still one
of the most important World Banking Centers.
Right in the core of Industrial Europe .
Banco Ambrosiano
Established in 1896
Leader of the most Important Italian non - State Controlled
Banking Group with more than 38,000 Shareholders
All types of Domestic and Foreign Banking Transactions
through the Group Network of
359 Branches In Italy, controlled Companies and
Representative Offices throughout the World
REPRESENTATIVE OFFICE:
HONG KONG -3115 Connaught Centre, 1 Connaught Place
TeJ. (5) 258521 - TeJex 61038 AMBRQ HX .
AMBRO-ASiA DEVELOPMENT LTD
HONG KONG - 31 15 Connaught Centre, 1 Connaught Place
Tel. (5) 214396/8 - Telex 61038 AMBRO HX
BANCO AMBROSIANO Is a Member of the Inter Alpha Group of Banka
BANCO AMBROSIANO - via ClerlcI, 2 - 20121 MILANO (Italy)
Telephone: (02) 8837 - Telex: 310204 Ambro I
“IN THIS market we expect of space was built during the
five years fat and two years year and the .figure Is set to rise
flat.” It takes little insight to to about 4m sq ft in each of the
establish which particular phase next three years, leading to a 25
in the cycle — spelled out by Mr. per cent increase on total stock
Trevor Bedford, the managing recorded at the end of 1861.
director of Hongkong Land — This year alone, there will be
the Hong Kong property market over Sm sq ft of retail fioorspace
is now expen encing.
available for occupation, over
Years of “fat" there have three times the highest annual
certainly been, with property take-up recorded since 1977.
values quadrupling rents esca- Last year, the amount of retail
lating and new development s P ace newl y 0CCU P i «d accounted
reaching a pace which few for ^ l ss ^ an 60 . ' p ® r cent °* a ^-
other real estate markets have new fioorspace built.
the time being, the “flat" phase sector are not, however, con-
is very much in evidence and fined to the question of simple
may well be for a longer period over supply. By permitting full
than Mr Bedford is prepared to coverage of any site for the first
envisage.
50 ft in height. Hong Kong’s
The seeds of the latest boom development control laws have
were sown in 1976 when confi- encouraged the building of
dence began to return to the °® ce towers above retail
local property market, after the Podiums- During the recent
two-year standstill which came ^ oom ' ™ a py such podiums were
in the wake of the stock market so,d ®“ “ e Pj"* t0 . numerous
collapse. There were growing/ peculators who took units of
signs that demand for fioorspace sq ft and u Pwards.
in all sectors was rapidly mov- Multi-ownership of this kind
mg ahead of supply and by-1978 has made control of trade-mix.
activity had been stepped up design and fitting out virtually
sharply.
impossible and as, in many
Much of the fresh wave of cases, the prices bore little re-
development was supported by lation to the rent-paying ability
a huge influx oF money from of the tenants, several major
the rest of South East Asia — schemes have now become
there are .no restrictions on blighted.
the inflow and outflow of funds - The completion of at least ten
— and it was the residential prominent podium shopping
sector, which forms an integral complexes over the last year
part of the propertv develop- has added to the problems of
ment and investment market in oversupply and the end result
Hong Kong, which led the way. is that tenants are paying much
•It was the residential sector closer attention not only to the
which proved the most active location of available fioorspace
hunting ground for the specu- ^ *> the quality of the man-
lators who funded new develop- agement of particular develop-,
ments and then bought and sold men ts.
them as prices raced ahead,' Although the retail market
establishing what in effect is generally -sluggish, there re-
became a '* futures " market in main bright spots. Among the
apartments.
most impressive of these is
But if the signs of a change Tsimshatsui, ah impressive re-
in thp economic climate were tailing centre across the har-
crowing. many speculators pre- bour in Kowloon which has be-
ferred to ignorp them until it come the natural magnet for
was ton late. In 19S0. when the tourists. A combination of air-
m»w era of high interest rates conditioned, multi-story shdp-
final'lv arrived, the residential ping malls — such as Harbour
pipeline was bursting with new City — and more traditional shop-
units and developers were ping streets provides unlimited
choice in consumer goods and
_ _ , some excellent real estate in-.
There has been a huge vestments.
reversal in residential Prime rents in locations like
nronertv values with SO Nathan Road have been reacb-
ins HKS140 per sq ft a month
per cent I<ms in some while rents for top quality space
places.
taking delivery of apartments
in Central District shopping
centres are closer to half £«it
level.
In the office sector, a fairly
for which buyers, frightened off buoyant takeup position has
by totally unjustified prices not managed to stem the grow-
and high interest rates, were ing tide of surplus fioorspace.
suddenly absent.
The principal office locations
The net result has been a are in the central business dis-
huge reversal in residential trict, Wanchai and Tsimshatsui
property values, with falls of and the oversupply is being felt
up to 30 per cent being by them all, although Central
recorded in parts of the colony, can expect continuing strong ,
At its peak in 1981, the market demand for whatever, prime
saw some prestige develop- space becomes available.
being sold at prices over . Government figures indicate
HKS3.000 per sq ft but now that there will be another sub-
prices of good quality apart- stantial increase in new supply
ments on the island range from of office space in the next three
around HKS200-700 per sq ft, . years. Last year, over 3m sq ft
while well-located garden-house was built, a figure which will
schemes command prices of be nearer 5m sq ft this year.
over HRS2.000 per sq ft.
Similar supplies are forecast for
Rental levels for high quality both 1983 and 1984, a perform-
developments range from about ance which will add over -15m sq
HK$8 to HK315 per cent sq ft ft (nearly 60 per cent) to the
per month and there is good stock of such space recorded at
demand for residential accom- the end of 1981.
modation at rents of up to • Last year, take-up In the office 1
HKS50.000 per month. The sector reached over 2m sq ft but
pattern is patchy, however, and over 3m sq ft remained vacant.
asking rents for some of the an increase of nearly 50 per
most attractive island locations cent over the year as a whole.
bear little relationship to what
the tenant actually has to pay.
• Hie figures are global and
some sections of the office mar-
Many vendors are outwardly ket will continue to perform
maintaining their prices but better than others. But as the
reducing them via the avail- supply increases over the next
ability of special packages. The three years it seems likely that
general view is, however, that a greater proportion of v acan cies '
the market will not show real will relate to space in the lower j
signs of revival until interest grades.
rates begin to fall.
At the same time, however.
,1 s a ,T* ew w !P c j 1 high rents and prices for cen-
equally well extended to other t rally located offices are en-
scctors of the local property ctmraglng tenants -and owner-
market, where surpluses of occupiers to examine alternative
space and generally • slack locations. In 1970, two-thirds of
demand have created . what a Il office space was tmilt in the
. A _ -- VAX VUiVb kiwnvv « wv wnm
amounts to a glut of accom- central/Causeway Bay area but
modation. .. the proportion of new develop-
l n J h f, "ff 1 ment in this area is now down
ftf evid/Hi mem m ui» a tea w uu« uwvti*
target of thearmy P * t0 . a round one-third, a -figure
la tors who were able to take ‘■X A v % { ~
advantage of strata-title laws "J 1 ** 1
■urKid'h nwirrit fracmiented own- finding new develop’
which permit fragmented own- ^ 01 ““““s
ership of buildings, the recent
high level of actiwt? has left a the growing trends
large oversupply of new space. t ° wa f£ s greater geographical
Although last year's supply distribution of office accommo-
was .about 12 per .cent below dation.
original forecasts. - the total A larger proportion of office
volume of new retail space avail- developments is being offered
able increased at its fastest rate for sale. Last year, about 60
for some years. Over 3m sq ft per cent of all newly completed
schemes were either pre- sold or
made available for sale, com-
pared with ohly 25 per cent just
four years ago, another reflec-
tion of the occupier's deter-
mination to avoid high rentals
and share in the uplift in capital
values.
The same pattern ef surplus
and slow demand is repeated in
the industrial property market,
where the recession in manu-
facturing activity has taken -its
toll. Hong Koog haS a total
ever managed to achieve. For The problems of the retail
Several of the major
developers believe that
the market will remain
fairly stable for . up to
five years. -
stock of about 150m «q ft of
industrial fioorspace, About,
three-quarters of which is used
by manufacturers and most, of
which is in the form of, flatted
factories, fully utilising the
expensive land which is avail-
able.
In 1981, more than 11m sq ft
of new space was completed and
a slightly lower total is forecast
for this year. There are sug-
gestions that the figure could
rise again, however, to nearer
18m sq ft during 1983 and over
20m sq ft in the following year.
Whether or not this volume of
space actually materialises
remains to be seen, bnt there
are already clear signs that
developers are curtailing their
original programmes. Average
take-up between 1977 and 1981 .
has been running at under 10m
sq ft a year.
The most obvious weaknesses
in the Industrial sector have
emerged in the New Territories,
where the majority Of new
development work has beep
concentrated. Most -, affected
have been locations like Tuen
Mun, KwaV Gmmg-Tsuen )Van
and' Shatim . Bents- in these and
other parts of -the market are,
anything up to 25 per cent-below
the peak obtained in; 19811 : : '“
Industrial \ land prices - have
also been effected, and in some
locations. . such as . parts of ;
Kowloon Bay, the Government
cannot sell industrial ■ land at'
asking prices. a$ miuh- as two-'
thirds down -on the peak. . -The
prospects for recovery may/weU -
favour places like Kwai Chung
and Tsuen Wan, .with their tyCass J
Transit Railway connections, at
the expense of-.locatious llke
Shatio. which is still' -haying a :
job hi attracting new businesses/
Small L winder : . that . . the
government is . finding .’ .- it
increasingly bard to . fulfil the :
volume ‘.of land ' ' sales— rand-
badly; needed revei^ it
has needed: .' For years, it fias ;
been criticised ^Or keeping its
land release programme to. a
bare Tnjnrmuni, •. though. ..it,
believed it. was • injecting 1 as -
much as at could reasoaaWy be
expected to provide! . . ■>.
But more recently the volume'
of land being made - available
for ali types nf development has
been stepped up, only , to find
that there are few, -if any,,
takers' in the market. From a
point at which developers were
asking for phased payment of •
land acquisition — Such were
the costs involvedr— there have
now been complaints from'
competitive-bidders that delays
in payment on the part of some
purchasers have enabled - them
to take advantage of the falling
market and pay liss than was
originally agreed. '
It is the extent of. the. wide-
spread oversupply.df- spate and
difficult financial pnvinafitneht
Which : gtves - rise ' to doubts *-. r
about T the. ' - local ;. "property •
iiaarkefs -ability*' to resOme its -
f orwitrd .march -qiilte^as -qifickly
T ks some would, like? to. believe. V- ; ’ '
“ Several ' : of the major
developers iel ieye -tha t the - ■
njarker-will remajn fairly stable : -
for anything up to five ^ears, T.
though they are ■ all convinced . ..
that the’ nfcxF. hectic " bout', of f,i : -
activity r Is simpTy a/ matter of . .-
‘when and not ifi-^While.the -mar- C‘ : ■ .
ket; position may' provide little ;
-solace for" those developers whp ’ / ; .
over-extended themSelves hr tt a y ^ 1 • .
peak ■ of : fhe market, the Iona-'
term oportunities remain tu
deniably jininense. ; .
It is, . if course; .the longe '
term fliture:of:HdilgJConfrai3 It.' V
its;.' relsltiohship -with.- Chiita,:’'. •
which 7 overshadows ' all bthi r'-;'
considerations, though for the ;.r
time being its effect on thf/;
.course of- the commercial pwi’ ; _ .
petty market is not- atral^ ^ .
apparent. , , . •• V. • ;
, The question of the 1997 leafc ^?- :
oh the-NeW Territories remnUp f -
a tihac -for convefsation rathMvi' ..
a topic .for convefsation ramet-’: ^ ..
than a- deadline requiring posif,;;:
live action.' S&fai: at least, thCT/ -
market.-has show^ho inclinatioSL^., ...
to - differentia te-^for poIiticai^C
reasons-r-betweem the island. ]. .
Jtself and fhe Territories^..
. - But soon er.-rathe r lira n laterfe.
the property market will hav^.i-’.
to : begin taking j the politica..:.j
to' begin taking j the polinca.:. j
outlook . into its considerations ... i
To end where we started, witl, ‘
the- words of TrevoV Bedford?' "...
“ Hong Kongris a'J shout cohy
fidence and there isla .realisa,;- . .. .
tion-fln all sides that komethingi;;. -
will have to be sortedoht, Fot" :
.the time being, the uleertaintS A . ^ .
is .of littlie consequeno but. byi
the end of the decadewe must;--\. : . i;
be f at more certain atfut whaf^ C . "
lies ahead.” nVi 1 ...
I.l . , <: ?.L.
Wfe h»e becninHongKoag since 1969.
Over the last decade wfchavt built up the
essential investment expertise needed to
manage our range of locally invested funds.
Our experience iri local, as well as other major
worid stock markets, has. been the most
important factor. in ^fhe succe^ of our trusts-
l ' I li^ J F
If ydu would like t6 kicrw more
about these trusts contactus
at either of tile following addresses. -
ew- ■■
Sr i 'il :.V -
r .
fr .r.-T-
p-;:- b-
It - i’.vv. -
GartmcffcRind Muugers (Far East) Limited
.1503 Hutdiisoii House,
; 10 Harcourt Road, Hong Kong
• Telephone: 5-261264. ' ’ ■ ■ ' , -
Telex: HX 65 149
London Agents ' ’.
Gartmdre Fund ManagcrsLimitcd
*SL Mary Axe, Lonte EC3 A 8BP
. ; Telephone: 01-623 61x4
; . : Telex: 888606
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21 in
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EftXy . Financiai Times Monday June 21 1982
*~ KONG xm
PROPERTY
scorns
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An aerial view of Hong Kong With Connaught 1 dominating
"G"
“tt
)NG LAND is - one of
.cti^rTworid's largest property
r;.^pnfianics and as such incvit-
[ > s«Iy- attracts its fair share , of
'■^.Criticism as well as praise.
' critics believe that any
/ .gpmpany . of Hongkong Land's
|:i$ze.jnnst generate a comfort-
* Triple complacency and they see
i -36'. as. w organisation which has
.•#anscended the realms of vul-
,-^Sarabiiity which keeps most
'{^tnpanies on their toes.
. As one put it: “The Land
' J42ompany has the power to
, -^qtide what location constitutes
.’SSrime merely by deciding
». -Whether or not to be there. It
. -•can 'set rents by boardroom
indecisions rather than by
kfiking account of- .the state of
i the lettings market.*'
j /• i Such . observations Teeeive
S scant .treatment at the hands of
HK$4.75bn for the last remain-
ing prime chunk of develop-
ment land in Central.
The group has never been
slow in acquiring property in-
terests which can enhance the
value of existing investments
and the purchase of the so-
called Connaught II site is just
such a case.
A three-tower office scheme
proriding about 1.28m sq ft of
lettable floorspace is to be de-
veloped alongside Land's exist*
HONGKONG
UNO
standing policy of concentrating
on prime locations, first class
properties and the highest stan-
dards of professional manage-
ment will ensure sustained
demand for its properties.
Present trends could, in fact,
provide the group with a
positive advantage as tenants
have the benefits of good
property and good landlords
driven home to them by the
misfortunes . of. .others, - A
minimal vacancy rate would, so
far at least, appear to bear out
that conviction.
Hongkong Land also makes
considerable capital from the
fact that, given \he recent sharp
increases in rental levels,
around half of its portfolio is
let at levels well below current
market rentals. Implying a sub-
stantial upturn in earnings
no less than 134 per cent from
1980. Total assets exceed
HK$26bn and its interests
extend to 13 countries in the
region.
As. far as development activity
in Hong Kong is concerned, the
cost and scale of projects — to-
gether with the shortage of land
—makes it likely that joint
venture partnerships will con-
tinue to represent a major
option for the group. Last year,
Hongkong Land entered into a.
further nine such arrangements,
bringing the total in the colony
to over 30 and involving the
provision of more than 10m
sq ft of floorspace. •
Hongkong Land sees its prin-
cipal attributes as recurring
quality earnings from a top
quality portfolio (in marked
contrast to some troubled com-
[: Hongkong Land, which accepts ing Connaught I office complex once reviews — three years is panies whose earnings have been
i-lt- represents the blue chip
)' investment in Hong Kong.
? Which undoubtedly develops
: ^hd . owns the best buildings
and which, without question,
; has enormous financial re-
sources and an excellent track
record. ■
Any suggestion of com-
placency, however, meets with
prettied ble- - fcct>rn and i* is,
indeed, hard l to justify after a
look at the. present scale of
: Ms ambitious development pro-
. gramme and a taste of the
enthusiasm with which it
conducts its business.
1 The Hongkong Land diary of
events for the last 18 months
contains ■’ some impressive
; entries. It started work on the
600.00Q sq ft Edinburgh Tower,
.a vital component in its massive
Landmark .Centre in Central
district, tbok a 35 per cent stake
i&the HK$2^bn Miramar Hotel
stth/purChase, acquired stakes
TttvHpng Kong Telephone and
Hong Kong Electric and paid
and the two schemes are to be
brought together and re-
ch listened . Exchange Square.
The Connaught I tower is to he
reclad externally.
OP a smaller scale, the group
has recently paid HK$500m lor
the Batik' .of Canton building in
Des Voeine Road, which it will
redevelop 'along with a site it
already owns on the same block.
The extent’ .of the group’s in-
fluence on lHd.\ local property
market is underlined in figures
which show that about 2jm sq ft
of the 4}m sq ft of prime floor-
space due to come on to the
Central Market through^ series
of major development schemes
between now and 1987 '-will
belong to Hongkong Land. Its
prime portfolio in this area
alone will then total over 5m
sq ft of lettable accommodation.
The group accepts that the
local property market is now ex-
periencing a more difficult'
phase in its volatile history, but
firmly believes that its lqng-
the norm— come through.
Hongkong Land has close
and long-established ties with
another Hong Kong corporate
giant, Jardine Ma-theson. an
arrangement Which took a
major step forward towards the
end of 1980 when the twb
groups established 40. per cent
cross^ioJdings in each other’s
operations. .
It is an arrangement which
has come in for some criticism.'
with the move clearly designed
to prevent third-party bids but
arguably providing few other
tangible • • benefits. Hongkong
Land remains principally a
property development and in-
vestment operation, though Its
empire now extends to the
ownership of food, trading and
distribution, hotels and public
utilities.
The group’s profit record is
no less impressive than its
slock, of prime floorspace. In
1981, it recorded consolidated
net profits of HK$1.43hn, up
predicated . almost totally on
trading activities, the group's
trading operations currently
provide about 30 per cent of
profits) and the resources and
experience to tackle any
development challenge worth
faking on. With more than 60
development projects at varying
stages of completion, the strains
are showing through and the
group now admits to be
stretched managed ally.- -
Hongkong Land remains a
fundamentally Hong Kong-based
group, with 90 per cent of its
assets and profits related to the
colony, but it has also embarked
on further overseas activity and
is concentrating its efforts in
Australia, Singapore and North
America.
Although it is not revealing
too many details ybt, the group
has characteristically big plans
for Denver and • possibly
Houston and Vancouver. The
Denver joint venture should be
announced soon.
Medium-term future
on
: THE'NAME of Hang Lung, a
property development and in-
vestmeijt company started up
by-itvfei' brothers in the early
1960sV has recently threatened
. to dominate the Hong Kong
property "Scene.
Hpjg Lung’s emergence- as
the leading partner in three
separate 7 consortia appointed to
carry buKall nine of the Mass
Transit'. Railway Island' ' Line
station' contracts, so far awarded
has been :the centre of much
Interest and not a little contro-
versy. / ...
v: Eyebrows have, been raised
over - the group's financial
stamina'' in. respect of the mas-
jive capital commitment in-
volved in the Island Line scheme
•rlhefe -have also been rival
naxtttinbgs.aboiit the outcome of
.negotiations over. land premiums
.between: the MTR authority and
the government, which have
j gone in Hang Lung’s favour.
-. Hang .Lung is undeterred,
.highly delighted with its coup
t-aod determined to convert its
.tendering , success into one of
feSbng Kong's more outstanding
Speculative ventures.
-it began life . determined to
'build up a healthy source of
tincturing income, which it had
^succeeded, in doing by the time
■ft went public in 1973.. But In
gaining this objective its results,
(■suffered at .a time when many
competitors were concentrating
bit development ahd trading.
Hie grdup- took a long hard
look -at a. large: land bank, held
; at historic costs, . and began to
:«ke a much closer interest in
developer-trading- activities. *
.By - the time the MTR con?
tracts , came along. Hang Lung
was in *he market for large-scale
developments, as witnessed by
its ? extensive - . ' residential de-
velopment programme and the
present: Construction of tbe
Aigyle 1 Centre Tower I in
Mongfcok; origin aHv intended as
an investment but in which all
the office space basbeeopre-
soW. v. '
About ■ .W -per cent of tne
retail floor space has- also foynd
- .... -- — >> ^ -
-■« V.ft
**■ ■■ \ ' - f l .-Hi'-- ' ■■■%* rj . ■ .
,
■ v S
- •; . . . ^
fy ti.; v
A proposed development, by Hang Lung at KornhiU
HANG LUNG
buyers. Most of the group’s 1982
profits — they rould rise to
HK$ 550m against HK$22lm in
1981 — are expected to come
from these transactions., Hang
■Lung is also involved in the
development of Argyle Centre
Tower II. due to be completed
next year.
But it is the MTR contracts
on which the group’s medium-
term future hangs and there
have been fears over its exten-
sive commitments at a time
when the. property market is
hating a . rough ; ride_ and tbe
group’s borrowings have- risen
sharply to more titan HKS lbn,
oyer- li. times shareholders'
funds.
But Hang Lung is by now
used to the arguments and is
well prepared with the- answers.
It points out that although the
total costs of construction and
land premiums are expected to
reach a massive HK? lObn. its
own share of costs will only
reach around one-third of that
figure. ...
Development of the island
line sites begins In earnest next
year, ' but the group emphasises
that the ' construction , periods
will not be concurrent add it
describes the programme as “a
comfortable seven-year commit-
ment.”
There is also the prospect
that • with property values
weakening, some of the land
premiums payable to the gov-
ernment and now- under nego-
tiation could be lower than the
figures originally - built into
costings, to the benefit of Hang
Lung. In one case, this has
already happened. -Another six
station sites have yet to go out
to tender and -Hang Lung may
be back for more.-
The group is looking for a
sizeable cash flow from exist-
ing development projects over
the next 18 months to two years
to help it to finance' the MTR
programme. It is also well
aware that its existing land
bank will be substantially
developed in the next three
years and its new commitment
to the Island Line will extend
its work programme into the
late i9S0s. making it one of
the few Hong Kong property
companies with any clear
development plans beyond
1084.
As for the prospects for the
resulting mixed developments.
Hang Lung is confident ot their
success. It believes that the
gradual transfer of passenger
traffic away from tbe congested
roads to the MTR system will
ensure that scheme will be
viable.
. Hang Lung intends, with its
consortium partners, to sell off
the completed developments,
althougi it is not discounting
the possibility that it may itself
end up by purchasing some
of them for inclusion in its
investment portfolio.
■ Elsewhere, the group is par-
ticipating in a number of com-
mercial and residential develop-
ments in - Kowloon .and Hong
Kong island and also in a few
smaller industrial projects.
Total fioor area under or pend-
ing construction now exceeds
8m sq ft.
Tbe group’s . controlling
interest in... Amoy Canning,
whose main attraction lies in
its property assets aud a plan
to move its food canning activi-
ties to ' the New Territories,
should provide further scope
for developments* in Kowloon.
Although Hang Lung’s teintal
income will provide a decreas-
ing proportion of total earnings
over, the nest few -years as
development profits. come is —
they could, be as. high . as
HK$ I*5bn from the Island
Line contracts-Mt has* built up
and intends to maintain a high
quality rental portfolio. -
This portfolio now covers
well over 1m sq ft and substan-
tial income growth is expected.
xm
Asian and Arab
:ets in focus requires
a special point of view
Trade between Asia and the M iddle
East is nothing new, but it is growing
rapidly, spurred by strong Arab capital
markets and the emergence of Asia as
one of the world's fastest-growing
regions.
Arab Asian Bank was created to
provide complete and professional
banking for this specialised market
We nurture Asia's regional traders
with export/import finance,
eurocurrency lending, market appraisals
and introductions, joint ventures, foreign
exchange and money market operations,
bid and performance bonds, advance
payment guarantees, and much
more. With the in-depth
experience of our executives
and senior bankers, and our
access to the latest
technology and techniques,
There is
onlv one
Arab Asian
Bank
we have probably one of the best teams
in Arab Banking involved in Asia. Our
Asian currency trading desk is a
recognised market maker in leading
Asian convertible currencies.
We also support business in Asia at
i every level: financial advice and
management capital re-structuring,
amalgamations, take-overs,
mergers and acquisitions,
together with equity and debt
issues, and trade and project finance.
Our headquarters are in the heart of
Bahrain’s banking district We have an
operating base in Hong Kong with
strong affiliations with
banking institutions
in Kuala Lumpur. Kuwait
Saudi Arabia and London.
We are the Arab banque
d'affaires with roots in Asia
Arab Asian Banke.c.
Address: Optonwt T oww, PO 8cx56f 8. Bahrain. TeC £33 fZ9. Totes: M83. ABUAL. Arab Asian fntarnatonal Lfmrtad. 1003 Mimrefty. Tourer A IF Hareourt Raid, Hong Kong. Tot 5-I50rtO TsJUC Atf 23.
Gtouo assets: USSJJbdban.
Schraders & Chartered
Limited
1 981 — another record year
• Funds under management increased by 73%.
• Advised on 11 takeovers with a value of
,HK$3,900 million (US$650 million).
• Arranged or advised on the raising of equity
■ and loan finance, totalling HK$14,200 million
(US$2,400 million).
Schroders & Chartered Limited
Chartered Bank. Building Hong Kong
Telephone 5-257102 Telex HX75682 - ■ ■
InternatioM Associates:
The Schroder Group and Standard Chartered Bank Group
,? ■■^ryX-'ZIr *•£.. -
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' Behind the
HUD directory is 100
years of experience.
Hongkong United Dockyards are the biggest ship
repair and conversion specialists in Hong Kong. Within
one new complex there are the facilities to handle
. every kind of vessel — right up to drydocking
and servicing a 1 00.000 DVyT ship. And there are even
special HUD flying squads which use planes and
helicopters to undertake initial assessments while a ship is
still on the high seas.
Built on Experience
_ Hongkong United Dockyards Ltd.,
Tsing Yi Island, New Territories. Hong Kong. P.O. Box 534, Kowloon Central Post Off ice H.K.
Telephone: 0-45121 T Telex: 73547 HUDHK HX Cable: HUDREP Hong Kong.
U.K. Representative: Ship Repairers & Shipbuilders Ltd.
York House. 199 Westminster Bridge Road, London SE1, Tel: 928 5265 Telex: 918828
This space
is reserved for your
success story
in Hong Kong.
We've helped finance
ventures in Hong Kong
since 1955. We now
operate seven branches -
here and can assist in any
project that requires
sophisticated international
banking facilities.
We have the ability and.
the flexibility to help you
do business in Hong
Kong or anywhere else in
the worid.Apart from
Hong Kong, we have
branches in Singapore,
Seoul, Colombo and a
global network of corres-
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Ecuador to South Korea.
Weiofter;
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• Syndicated credit •
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If you're doing busines$.in -
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-with us. It pays to have
iOBfon-you reside.
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P.O;Box-Nq. 3765 1
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Indian Overseas Bank
45 years of international banking.
mm
DESPITE THE ambitious and
iong-ra fining programme aimed
at -overcoming Hong Kong’s
greatest single social challenge
'-the provision of decent hous-
ing for its 5im inhabitants — it is
clear that the problem is far
from being salved.
Ten years of concerted effort
to house Hong Kong's people .in
a style appropriate to one of the
world's most dynamic and
promising economies show giant
strides along the road, towards
that objective/ The scale of
achievements cannot he over-
looked or minimised but the
task which remains is neverthe-
less immense.
Despite the high output of
new flats io both the private and
public sectors, much remains, to
be done. Estimates suggest
that, at the end of 1R8L. there
were still more than 163.000
families on waiting lists while
750,000 people are forced to calT
a squatters’ hut their only home.
There are critics who suggest
that, under former governor Sir
Murray MacLehose, housing
became all-important, to the
detriment of other aspects of
the colony's development, but
his dedication seems justified by
the enormity of the problem.
To Sir Murray, the desire to
provide homes for millions in
one of the world’s most densely
populated places became an
overriding objective, no doubt'
regularly reinforced by the
plight of refugees whose only
choice was and still is to squat
in shanty areas which regularly
fall victim to - devastating fires
or landslides.
’ Hong Kong was for several
years after the last war the un-
witting recipient of an immense
influx of Chinese immigrants
who had nowhere to live and
who placed intolerable pres-
sures on a housing stock which
was outdated and hopelessly
inadequate..
In the wake of the now in-
famous Christinas Day fire in
1953, which left 50.000 squatters
homeless, the colony launched
its public housing programme.
Within little more than a month,
the authorities had built emer-
gency housing for 35,000 of. the-
victims and the same sense of
urgency adopted then has- re-
mained with the housing devel-
opment programme until the
present day.
It was In 1072 that Sir Mur-
ray announced a 10-year public
housing programme aimed at
breaking the back of the prob-
lem and, since then, more than
30 estates— all of them self-
contained communities — have
been added to the 68 which
were built in the years before
the latest initiative began.
Now, more than 2$m people,
or about 44 per cent of the popu-
lation, live in public bousing
provided or subsidised by the'
Government
Under the guidance and. con-
trol of the Hong Kong Housing
Authority, the government
housing programme aims at
producing 180,00 flats for rent
and for sale over the next five
years. It is now actively.,
encouraging its own home'
ownership . scheme — which
enables- -.lower-income -families - *
to buy their own flats at reason-
able prices. .
- Public "housing tenants pre-
pared to surrender their low-
- . - - »•«
7 “ -
/ 'v«W*
. .. » « V
t- f ii Mif jtf * TiZl * - *
V'
,-,.7 .^77; - Sit;./ .
\y ~ r 7 ' ’ r -\’ • ,V:a - , •
y ; - v 3' »•• ">• 7-v7 •» .*
* _ ‘ ' , «'r_7 • - , <i _; ' _ ! ^
/
7 7 - r
: ' '7 ':*. v. '•
HoiisiTig j (&eUxfmie7itktt„S^ ^ of . Hoi iff ;
rent flats and families' living in end result usually, represents
the private 1 sector biit oh low ; such . a major improvement over
incomes have a chance to ballot - .previous .accommodation.- .that
for- such owner-occupied accom- the ' compromise V ' is ‘-tot^ly
modation. A 10 per cent down acceptable.
payment is required. 15-year Such is the • demand- for flats
mortgages are granted and the that waiting lists; for 1 accom-
buyer must give first right of modation cm Hoiig Kong island-
repurchase . to the authority - stretch to 10 or Iff years, those
within the first 10 years.
in Kowloon to /seven or eight.
«2T 2SS£"fiKVSt" SP 3^*
vidod cost-price f tnere is no -i __ m* ^ '
.honiai- Hnnwc for- nvivp located areas. -To-. quarny 1 even.
land charger- homes for over .
15,000 families and » . taf-T"'
. peopl e. . > - v ' ; V'V'I l •' •>;
ii mi nm a While. 30 p‘a”' cent.,of the
HOUSING , - • Housing Anthbriiy’s-Jwmes go
to‘ those^oii; 'waiting lists,. 25.
per cent are .allocated to squat-
ters whds&r itrts. 1 ^ are pulTed y
45.000 residential units J are ni * an - development
rLrL.,, SUrfo and another 25 ;-per cent _go _ to -
planned for the current decade.
vide a similar dioice foir middle
income families.
Elats built under the a*feme
-special ueedsr such /aS the
elderly, and the disabled.- -
/' With' much of tbb potential
— ra nging in size from 35 square f or residential development -on
metres to 65 square, metres-— are island and in Kowloon now
'claimed to be up to the.standard ' wge ^j up r the. emphasis has ,pbw •'
of good private developmepte. swun g. heavily -in favour 0 the
The income bnut for elipble jj ew Terri torfes, where .virgin
applicants.^ no w HK$ 6. 50 0 and enables individual estates
; prices range from HK$li 0,000 jjg jjuiit' as- coaniHete cdm-
pnces range irom t0 built as- complete cdm-
to HK$375,000. munities, with a fplL renage of
Puhlic sector rentals for new social, educational and recrea-'
accommodation now generally tional facilities.; -Kor the. time
account for between 1,0-15 per being, however/ the emphasis
cent of average household has" bew oh - housing while
income and a single room apart- other commodity facilities have
ment would now involve a .been lagging' behind. '
monthly payment of around Huge areas of the -New Ten>;'
HKS300. Housing authonty tories-'dre hot. yet inhabited at--
rents represent betw^n one all hat development activitj- in
quarter and one third of market several selected.: locations is
rentals. racing ahead, - ?
To the outside observer, the.' '- Completely self-contained
scale and density of the new- new towns' arj? being developed
generation of housing estates at Tuen Man. Sha Tin and
represents everything that town Tsuen Wan, the last of. which'
planners and architects. in many has a planned ' population of
other countries have, been try- -about lm against the present,
iog to avoid -for years,, though soo^OOO. - Tnen Mun alreadv
few of them have *he constraints boudes 150,000 ana with .300
experienced byf- their counter- people g day moving Into new
parts in Hong Kong: homes the population' target is
Strings of skyscraper blocks just over 500.000. In Sha Tin,
offering;. ' variations on a with 200.000 residents already ,
repetitive- 'themei efficient' but housed, ; the planned population'..
depressihgly uniform, appear of around 500,000 has been ex-.,
dauhtibg and are- arguably the. panded to a proposed 800.000.-
resialt of a compromise aimed at .- There is. in addition, a plan-
"provi diflg. v desp era t ely needed for a new* town at Junk Bay,
residential accdtanhodatjon.with-. ^htch could house 300.000
■W. a tight budget and a ti^ec^rweaple ^its future, m&y depend
timescale:" “'>-^-7: -'^-Qt Ntir^ jpogstbie extension 6 f the/
. For the tenant' "ho wever, the Mass' .Txahsit Railway .system) .
while a. Second
- smaller new, towns . 'drer^iaSing .
, shape- at Tai; Pu. Yuenjiing and
Fan-Ling.- : 7 1
• • In - r swne.^ Todatimis, there ‘ is
- interest from the .private sector '
,• ixL helping ;to: provide a ; Wend
.-• of - Housing" temmes. ’ fiiyen the
difficult]^ of the. private _hous-
-ing m ar^L;hovreverv . targ& num-
-hers; of..toew|y; :, derek5led -flats
7 are 1 iiot-5e0i^ah^ ')me added
~ ^ulnerabflity ~o£ :p6orly located
;• the " New Terri-
•tW^-'tiqi^.iKrov'down' further
jtiivate- sector; participation-
/ TSie private sector has.’ an
. important; role, to play in Hpng
Ktmgls /overall housing, scene.
Government figures, show- that-
The stock of permanent domestic
accommodation "at the end - of
: 1981 stood., at just under
1m unjts. r comprising 485,000
in thp-puWic sector and 509,000
m toe private sector. Ih/jlSSl ■
the' prLvate sector' provided
nearly 35,000 new homes, almost
exactly half of the total for th? .
year.. About 55,000 units^are
T expected to be completed ' - in
19S2 and 1983; with a fnrthoi?-
25,000 planned for 1984.;••; :, ^.
Last year was an other 1 Tbuas.
year . for.' private housing * de-
velopment, despite high fiateresr
rates and falling sales. Large
numbers of neW‘ flats- arrived
on the marJcet.for which 'takers
were- few; certainly at rentals
Which were necessary for die
developer but totally out- of
'3ine with what the market was
prepared to' accept. Tber net
result has been a big fall in
private' residential- values and
rents, though these -have invar-
iably been disguised through
special offers which outwardly
maintain asking prices, .
The private housing sector
. has its own acute. proWems and
previous scarcities of Reason-
able accommodation have.fqrced
up prices .and- - rentii. to 'Ifevris
which rank among the most ex-
pensive ’in tbe ; wcRld 7R?ntal
.levels on thelfeiaiKl range- up to
.^around 7 HK8T5 -per sq ft per
. month . had : good ; ;reside*rtial
atcoramodatibn! cau; still, -xom-
xtiand- rente'-, of HKS50^DlO a
month - and; more. Air for -town
" house accqmmodariOh.':
rents.canrsach tiie dSayhfewWs
of HK$SO,O0Q- per •mqhtft'lhptigh
recent evehts^ ^^ave^ ^4him?.;deals
. at this level ah exception,^.
fc:V
FLAIR AND FINANCIAL back-
ing tend to go down . well in
Hong Kong and Carrian Invest-
ments seems to have its fair
share of both. Carrian’s world-
wide interests have been rapidly
extending into tourism, ship-
ping and insurance but its am-
bitious involvement in the com-
mercial property market has
until now created most interest.
Carrian emerged on to the
centre of Hong Kong's corporate
stage In 1980 when it made
a generous offer for a con-
trolling stake in Mai Hon Enter-
prises (net assets HK$lSlm), a
small property subsidiary of
SteJux Manufacturing. Carrian
Investments represents the
major quoted vehicle of the
Carnan group and its parent
company is Carrian Holdings, in
turn a wholly-owned subsidiary
of Carrian Nominee.
Carrian has been a very active
participant in the local and
international marketplace.
Although its purchase in 1980
of Gammon. House for
. HK?998m and the subsequent
resale eight months later for
HK$1.65bn remains the -subject
of considerable ■ debate and
acclaim,' Carrian's involvement
in property since has not repre-
sented anything of an anti-
climax.
land at -the planning -stage, -
nearly ' 600.0(H) sq ft in the- '
course of development ahd
over 700,000 sq .of developed
space which is '.now. - .Tor. -"will
shortly, be producting' rental
income. Itv addition, there is
634,000 sq ft of agricultural ;
land in the New Territories.
The group has joined with
Hongkong Land to redevelop
CARRIAN INVESTMENTS
Mr Tan emphasises that its
property interests represent
cash investments and that the:
group, therefore; ;<jan afford -a,
flexible approach towards ; the '
timing of Its development pro-,
gramme. . ......
The- source of Carrian's finan-
cial strength — consolidated net
assets at the end of 1982 were
HK$3.37bn — has created . as
much interest as its rapid ex-
pansion and diversification and
although the group. -.is siowly
.opening up to outside scrutiny, '
it remains protective about the
source 1 of the immense resources
at its disposal.
It is known, however, that
ultimate ownership of the group
lies with four families in Malay-
sia and Singapore, one member,
of whom is Mr George Tan,
the group chairman.
Wherever the money comes
from, Carrian is intent upon
continuing to inject cash into
the organisation as it pursues
a diversification policy aimed
at broadening its assets and
earnings base.
On the property front,
the old wing of Miramar Hotel
on Kowloon’s “golden mile”.
The site was bought for a
record HK$2.Sbcu mainly on
deferred terms, and overall
Carrian has .a 48 per cent stake
in the 1.1m sq ft office and
retail scheme which should be
completed in 1985 and which
could gene rate total profits of
up to HK$lbn. . ..
He admits that the recent
'hectic pace on the property"
front may he. slowing, for the -
time being at least; “ You can-'
not continue lowest things up as .
we have without stopping, oeca-
sionally to- digest what you have
consumed, But .we will, still be
anxious to take, advantage of -
the weaker property market in.”
Hong Kong in searching if or.
good- acquisitions.”- -
The group's involvement with
Hongkong Land spreads to
other projects and while the
arrangement is clearly based,
on sound commercial principles,
.the. tie-up will do-nothing but
help Carrian establish itself as
a heavyweight to. be reckoned
with. '
George Tan says that Carrian
—as at May — had no fewer than
36 development projects under-
way around the world.: involv-
ing both . investment and trading
properties. In Hong Kang, the-
group has nearly 3m sq ft of
Cairian's property “interests,
like those - of .most otber 'coot
mereiat property concerns- in
Hong. Kong, -also extends to the
residential sector, including
several residential units and an
interest in the former Hongkong
Land, luxury .apartment develop:
ment in Midlevels, known' as
Tregunter.. r ' , ’
The group's property involve-
ment is not being -confined to,. ;
Hong Kongand it has ambitious
plans for the U.S., where devel-
opment projects are 'already
underway. In Oajtiand, Cali-'
foraia, Carrian- Investments has
just bought : out . the remaining
51. per cent interest held by. its.
parent in Asian., Holdings^- a
company developing a -1:6? acre
aiy office and Tetafl:-riWJffblcl«
will' provide 378,00ffj aq>yt of
fioorspace.. Completion, iS; due
■iater, this year. • -. .... --.V^
The second phase involves the.'
construction of an '-.office tower
comprising 2J3m sq 'ft. BoSdi^S
work should begin; this -year
■ with completion scheduled for
-1985. Rental . income' 1 is'- cur-
rently estimated at a
,.y«r-‘: ir~
: In OriandCL, Florktn, Carrian
has purchased ah inter est in w
8l Quaere site adjacenpro.WaH
Disney- World; . Negotiations
aire underway to se!l’7pa®es 01
the land for UB:5i7m, ; :which
wbuld result in the bdist of the
' land . and InfrastrucfeaTO ijseing
retovered.- and -leavihg-tbe re-
mquiing. acreage at -cost to
tkidj i developers.:
: ? ;Els'ewhereJ . Cajriani ? 1135
• interests in development. 1 ' pr°"
jecte.in Los. Angeles, C^lifornw.
i.the" Philippines, iffin^pore.
; Australiaj'.'^New Zealaifii - ; ajio
JapajR. . ■ a.. I- •->-•. • v ■
.'- - Tip emphasis -is-oit buSBdiQ8 s
-.on; prime -sites , and, . : Carrian
; shows t:* i Jnarkeo mctiaatiol 1
towards. ' ‘a . -joint:'- vfenture
approach, preferably with a con-
: |rolling interest. -Because most
-of its schemes Will be new! how-
ever, the potential ’for' inco®*
growth in- the- first: few years
will- be limited, although this
should' then begin to
The establishment and coo*
■ tinual manicuring of a- soon®
. investment portfolio, pcoridio? ;
‘ recurring Income,- will -remain a i
major priority. Property trad-
ing looks set ‘.to contribute 1
substantial proportion of proo® '
. and Carrian i&.expected lo'aW‘ B ’ -
tain-: its.- ttaiditioit • for tJ»
spectacular. .
SHEK KIPJUEl
AftGYLE
TSIH SHA TSIH
FORTRESS
mu.'
ournm bay
SRE 0 N 6 WAR
CAUSEWAY BAY
9 e ’T^ueura, turning potentially short
1 1 innm^'vc Into tirKnm* 'mam.
v^Khefi fewer .than 2a*per cenfof
’jt houseboids jiave'use’of a private
veinclei •• The- 700 Jon of roads
HONG KONG MASS TRANSIT
RAILWAY SYSTEM
existing ^
planned
NGAU TAU KOK
KWUN TONS
jjLn MTR car at Kowlooti Baif' Station. British company Metro-Cammell are making the 210 cars ordered
■° MTR car at Koirfooli
. ; • l “ snrai, ^ *r-' '
IlSolace
J , '-'^v down fcjfff . .
r ^fe i H ROADS in the . heart of
... *;! 0r te, XjfoiU? Kong almost permanently
'■ P»v a ffi- **-t niiM I VCPrl Htr Knmnoe Ia knm nnv
for commuters in an advanced transport system
^ Pflj OOSi ;tfi e present development
•= a - the a I ,7efc.toe Mass Transit Railway
' ,asi cannot have come a
■’H'? r !*!ns Si \3noinent too soon.'
- mv ovuu.’
. -s ::or and Sty ^^HoniT Kong is .■ choked by
• • Is E p rtrafBc. and the setni-perraanent-
• -or pmp.S .rongestion provides an ironic
:,ora « 1 slot.'^cbp.trast to the pace which the
•r.f total le-J^etnalndef of the colony's activi- '
: ubib i^Ges" manages to maintain. '
.. , ; r .Even more disturbing, how--'
'lit th* rt»j»li.<?ntfnn that «ni*h -
.fver, isthe realisation that such
inbuilt, chaos . arises at a. time
J .. ._»■ .«««. iU «MI.r>WWA« -
‘ i • , are already- incapable of coping L ;
: .. -v hicfl vehicle flows JWr. much .of
:-:.n.y at fay 4nd the position con-.
‘ ‘“V-tlnaes to deteriorate, dfe^plte a"
, 0ffi -r -IASI - budget ; for Hew - road
raartei^-.jg^uM,.' ■ improvements -and
■ -<-ijMibtenance of HKJ 737m.
- :>| r .’"Recent , proposals announced
r5 ' ae - i.Jby/the Transport Secretary to
h^e *- S vtriple annual licence fees,
iwt.- .double registration taxes and
:• ATiih ouws :
> pr.-ces.
■■ ?l»ilr'inj & ■
proble® 1 ....
a» *-7^r ''
-em« :ok
.-•.on; the fflS
• rforld. ^
.[-r.d rsnge?.
r.-er & t
■ooi res* i
y . jP. tfffi*
HKISflf ' 1
: . W f m As for^ *
•i ivjdjuon. * f
disff* i
I month. S j
raise; duty on -ligbt oils by 40
per cent are a measure of the
concern which the traffic prob-
lem now arouses, though their
longer-term impact on the posi-
tion is questionable.
It is against this background
that the Mass Transit System—*
not universally welcomed in
Hong Kong — is now being
developed at a rate which under-
lines the urgency of the local
transportation crisis.' The first ,
section of . the system, which has
15 stdHons and links the' east
Kowloon area by a harbour tun-
neV to’ central district on Hong
Kopg Island, started full opera-
tion; In February J980 and the
arrival of the Modified Initial
Systerit; (MIS) has had a signi-
ficant fnipaet on the lives of
many commuters.
During isai, the MIS carried
over 223m passengers, more
than— for " example — the com-
parahler ; ^ system, which has
operated' iff .Sap Paulo, Brazil,
for six years.-
The growth in passenger
traffic! has built up steadily and
bv the end of last year had
risen above 700,000 a day.
Although the continued increase
in numbers is regarded as satis-
factory by the Mass Transit
Railway Corporation, which in
December completed its first
fully operational financial year
there is some disappointment
that traffic carried has fallen
short of the original theoretical
projection of Ixb passengers
daily.
The corporation accepts that
part of the shortfall may be
attributable to some undue over-
optimism in the early stages but
it is equally well aware that
competition from buses on
routes which parallel the rail-
way has been intense.
The supply of bus feeder
services in particular has been
lower -than- expected and the
corporation is now saying that
if the bus companies cannot or
will not provide the necessary
supporting services, then it will
have no alternative but to help
itself.
. The expansion of the transit
system reached a milestone in
May, with the opening of its
second leg, a 10.5 km line which
runs from the north west New
Territories at Tsuen Wan down
to the existing MIS network.
The extension was not due for
completion until December 1982
but construction progress went
well and enabled the opening
to take place six months ahead
of schedule and within the
.projected budget of HK$4.1bn.
Addition of the new line, with
nine additional stations, is
MASS TRANSIT
RAHWAY
MICHAEL CASSELL
expected- to .take the MTR over ,
the Ira passengers a day level,
attracting an initial 400,000
passengers and rising to twice,
that level in the longer-term.
Construction has now also
started on the Island Line,
which will run along { the
island’s northern . waterfront
from Cbai "Wan to Sheung Wan.
The 1 line is due to open in
1985-80 and is being developed
at a projected cost of HK$llbn.
The corporation’s equity
backing conies from the Govern-
ment — its current stake stands
at nearly HKS5bn — but it is also
.deriving a significant propor-
tion of the required funding
through joint venture interests
with property developers who
are developing commercial
sites over the Island Line
stations:
Developers tender for the
work, provide the necessary
funding and an MTR station as
an integral part of the develop-
ment, and then share in any
arising profits with the corpora-
tion. The corporation says its
conservative estimate is that
the development partnerships
will -yield profits equal to some-
where around 40 per cent of
the Island Line’s construction
costs. Funding will also come
in the form of export credit
finance from the UK, ' France
and Japan, at fixed rates of
interest.
So far, nine of the Island Line
station site contracts have been
awarded, with five left out-
standing. Agreements signed in
1981 witi provide about 4 Ira
sq ft of office and commercial
floorspace and over 8,000
residential apartments. The
developments will come on to
the market between 1984 and
1988, with the exception of
Cotton Tree House in Central
—a 225,000 sq ft gross office
and shopping complex — which
will be completed later this
year.
The fact that all the contracts
let to dste hive gone' to con-
sortia headed by Hang Lung,
one of Hong Kong’s largest
development groups, has been
something of a local talking
point, not least among compet-
ing . developers who have'
claimed that Hang Lung has
encountered some very favour-
able contractual conditions when
it comes to meeting' its '
extensive 'commitments.
In particular, toe corporation
lodged an appeal against' the
premiums, which are payable to
the Government as freeholder
for the development' of toe two
sites, which mean the premium
payments were delayed. In one
case, the premium has been
reduced in the face of weaken-
ing property values, although
the corporation emphasises that
its actions have been correct
throughout and that they
bestowed no unfair advantage
on the consortia leader.
As for the corporation's
future, toe recent additional
injection of Government cash
(Government guarantees for
MTR debt will rise from just
under HK5 4bn this year to
HK9 6.8bn in 1986) has helped
reduce its loan-equity gearing
ratio from 8:1 to 2:1.
In 1981, toe corporation
showed a HK$ 491m net loss,
marginally down on toe pre-
vious figure and it says that
steady progress is being made
towards toe longer-term
requirements of making the
railway self-sufficient in finan-
cial terms. In recent months
toe MIS has been making a cash
surplus after charging all cash
outgoings including loan
interest but the opening of the
Tsuen Wan extension and toe
substantial increases in related
expenditure will have reversed
that position.
A return to cash surplus is.
however, projected towards the
end of 19S3. although interest i
rates will have a significant
bearing on the outcome. 1
The corporation believes,
however, that there is every
likelihood that the combined
first two stages of the railway
network will achieve profit-
ability before the Island Line
opens in 1985. ’
A ride on the MTR makes
such ambitions seem entirely
reasonable. The railway— roll-
ing stock courtesy of Metro-
Cammell — is clean and fast and
fares are relatively low. Many
passengers use stored value
tickets, .which toe corporation
says are attractive because of i
their inherent convenience and
flexibility.
The trouble is that plastic
tickets are also literally flexible
and it did not take the corpora-
tion long to find out that a train
full of passengers all flicking
them between their fingers not
only damaged the ticket but
created a fearful din. A
HK81.000 fine for “ offenders "
was quickly introduced and the
clicking stopped.
■m '■•'M ■*. .
.■‘tv * ' JSUt ;* **
1 BANK is the international arm and
l ' - ’ ‘ . J-TLlkjuitKy. marrasei: of a banking s^aTi with
- „ k Gorisofidated assets exceeding DM 377 bii-
wfr ? ! ffibfrdf US $1 67. billion, , _ ’
' r f* setve a. prime clientele of corporate
. ‘ nubficauthorities all overlne
-‘••n ,w .• . w^'proviefing sound solutions fOF complex
The 19:700 domestic banking offices of
our system - toe most extensive network in
the Federal Republic of Germany - virtually
blanket the country, providing access ;to
a cross- section of. toe German economy.
x * On the other hand, we. are accessible,
through branches, subsidiaries and repie^
sedative offices iritoecentersofi^^
alcommerce and finance.
Thus we combine the financial muscle
and toe market penetration of a strong
system with the flexibility, special expertise
and fast decision-making process of a
wholesale commercial and investment
bank. That's what . we mean when we. say
that our strength has many roots.
DG BANK London Branch, Licensed
Deposit-Taker, 6 Milk Street London EC2V
8DY, Telephone: 01-7266791, Telex;
886647 DG LDN G.
DG CAPITAL COMPANY LTD,
DG BANK Hong Kong Branch. Adrruratty
Centre, Tower If, 9th Floor, 18 HarcburtRoad,
Hong Kong, Telephone: 5-292715, Telex;
65190 DGCAPHX, 76498 DGHKHX.
DG BANK, P.O. Box 2628.-Wiesenhuet-
tenstrasse 10, D-6000 Frankfurt am Main 1.
West Germany, Telephone: (611) 2880-1,
Telex: 412291.
DGB4NK&
Deutsche Gerossensghsfisbank
The broadky based Bank
■^-■ r^ancial Times Monday. June 21 1982
HONG KONG XV
XV
TRANSPORT
XVI
Financial Times Monday June 21 . .I 8 g
HONG KONG XVI
Being small helps the economy because there are no industrial dinosaurs such as steel plants, says Robert Cottrell
Exports and re-exports
" . : y ,-„
:
'.tf.Vs" 1 *
A 1 '
Trade and Industry are Inseparable
concepts in Hong Kong, a city which
lives on its exports and re-exports. Cash
flows in and out of the country each
year amounting to several- times gross
domestic prodnct, while some 90 per cent
of domestic manufacturing is for export
Hong Kong's total exports, have in-
creased by almost 200 per cent In real
terms over the past decade. Last year
they totalled HK$122Llbn. comprising
domestic e xpo rts of HK$80.4Ira and re-
exports of HK54i.7bn. Imports totalled
HK$138.4bn.
Japan and China each supplied Just
over 20 per cent of those imports, while
the United States was by far the largest
market for domestic exports, taking over
36 per cent, followed by Britain with 9.6
per cent Hong Kong's entrepot function
put China at the top of its re-export
market, taking 19.3 per cent of re-
exports, followed by the U.S. with 11-5
per cent
The first quarter of the current year
showed a marked but anticipated check
for domestic exports, op nine per cent in
money terms over the first quarter of
1981. hut static in real terms. While the
U.S. as a market showed real year-on-
year first quarter growth of two per cent,
the UK showed a five per cent real
decline. China, however, proved an out-
standingly strong market, with a boost
of 68 per cent.
Hong Kong can, however, count itself
lucky to be reeling recession later than
than its Western neighbours. Mr Peter
Tsao, industry commissioner, suggests
two factors which may have been ‘ at
work in the past couple of years support-
ing the relatively buoyant local economy.
In 1980. the assassination of South
Korea's President may have caused
regional buyers, fearful of political un-
rest there, to have diverted orders
towards Hong Kong. In 1S81, when inven-
tories worldwide were pared back under
the burden of high interest rates, Hong
Kong's capacity for flexibility and speed
in manufacturing made It attractive, to
buyers who wanted to place short orders
to be filled and shipped— or airfreighted
—in a hurry.
For the current year, there Is neces-..
sarily gloom in the air. After the up-
growth first quarter'for domestic exports,
the Chartered Bank said in the May
number of its Economic Indicators . that
expectations for- a • second-half export
. recovery have been tempered. by absence,
of any concrete signs of economic upturn
in the United States. In Brussels, mean-
while, EEC protectionism has been
threatening Hong Kong's most important
manufacturing sector, textiles.
The encouraging eonnter-factor is that
Hong Kong has proved Itself remarkably
adept at benefiting from post-reces-
sionary recovery. In the years of the
oil-led slump. Hong Kong's real GDP
grew bv just 1-8 per cent in 1974 and 2.2
per cent In 1975. Bat In 1976, It grew
by 18.8 per cent.
H One factor which allowed us to re-
cover." says Mr William Dorward,
director of trade, industry and customs,
“was the ability in this free economy
for costs Including real wages to reduce
at a time ‘of recession, so there was no
uneconomic padding of industry.
“It is a Chinese characteristic to share
the available work and reduce the hours,
a practice which perhaps the West will
have to adopt if unemployment there
remains at present rates for a long time.
When the West became hungry for goods,
we were straining In the slips. The
rapidity of the recovery was as remark-
able as the recovery itself. I’m confident
the same thing will happen now.”
While there is no formal data yet to
suggest that Hong Kong wages have
already dipped with the present
economic downturn, another major
industrial cost has dropped substantially.
Helped by a bight level of government
sales, industrial land prices have
t umb led in some areas by a half and
mere since the start of the current year.
While that may be of little* comfort to
established manufacturers; it brightens
the start-up prospects for new ones.
New industry start-ops are . very much
on Hong Kong’s mind at the moment, as
it looks ahead to the emergence of a new
generation of manufacturers. Seme 40
per.cent of manufacturing sector employ-
ment and exports are now accounted for
by textiles . and garments, a low-margin
Industry bat one which has proved itself
a stable long-term economic base.
A further 20 to 25 per cent of the
manufacturing sector is accounted for by
the light industries whose versatility is
much famed. Plastic flowers, -wigs,' and
footwear may be produced from the
same premises as world tastes change.
Within the remaining 35 per cent of
the mamifactnring sector Ties Hong
Kong's hopes tor the future higher
'technology industries, particularly elec-
tricai and electronic goods. Four years
-ago, Hong Kong had the capacity to make
peSfbaps 3,000 television sets k year, says
Mr Tsao. Now. capacity is eight or ten
tupesthat- As of this year silicon chips
are - manufactured locally.
Managing industrial policy within a ;
■non-interventionist . .economy sounds
something of a contradiction in terms-
bat in Hong Kong’s case it- consists of
.providing general support facilities
-father than specific incentives. “We work -
under broad headings,*' says Mr Tsao.
"and IHs for the private sector to do the
individual work under those headings
„ . . The Government is very actively
involved, not in leading industry but in
following it providing support”
The one area in which the Government
may make a specific intervention i s In
allocation of land to a suitable industry
by private treaty, below prevailing mar-
DOMESTIC EXPORTS
by country of destination
U.S
(HK$m)
-1st half
1981
12,554
1st half
1980
10,414
Growth
rate
(%)
21
UK
3,394
3,223
3,128
9
West Germany
3,391
- 5
Japan
1,246
1,036
20
China
'
1,177
680
73
Australia
1,076
895
20
Canada
993
762
30
Singapore
802
828
- 3
Rest of the world ..
11,139
9.988
12
Total
35,604
31,122
14
Jket priees. 'As a more -general move -to \
- ensure that industrial, development is
not constrained bv lack of suitable pre-
mises, it has moved over the past three '
years to prescribe that some Industrial -
‘ land -developments must, as -a term, of
their lease, offer- factory . spate In -both fc
small units, and also large, ones suited,
to heavy equipment, lather than just the *
conventional medium-sized units Which -
might -have .been most' cost-efficient for *•
‘ the developer. - - ' V* ' • ’ -
.Beyond -land treaties, rspeciflepref ere n-
’ tiak treatment is withheld. “If 4% sector is-
subsidised,” says Mf TJsao, ‘fit .is- not --
going to show its true' worth,; iis true
efficiency. The chances are that sub-
sidised industry is not' going lo be as
efficient as an industry Which has. been
set up on its own ana survived..-. They '
win be Taring out to : people, who are- •
more efficient - the next thing yon .
have to . do is to protect that particular
■ industry, introduce quotas. .Help to
industry is "hot all that easily gtvenbe-
c a u se It has got unpDcations -all- the way /
through- . A .very w elMnteriti on ed policy
..will very often end. up wrth -protec-
titadsan.’’: ."•■ / ,:V,v*
The openness of Hong KongV teenomy
■means' that Its -development tends, to.be
shaped^ fey international demand - ••
thap.doriiestie supply factors. - As .world
trade grows, so - does Hong Kong's pros -
perity, so long as fte costs "remain; compe-
titive ted Its markets remain -.open.,
An important factor On the domestic
front remains Hong Kong's small size,
which may have proved something of a
salvation over the past couple of decades.
There are no industrial dinosaurs— steel
plants, basic chemical complexes— com-
peting for market share in an over-
supplied world. For the future, s u« may
be something of a constraint.'. There is
not .the domestic base to support the
heavily capitaMntensive /r^
development necessary to - •
noler? innovation. ‘Ttevttepinenl^sg, ;
research 1 doubt" says Mr Dorward^wbo.
£2? spectical .of the
concept “It always seems,
the concept of, putting a
'.rhubarb" ' ' ’ ' ' V ’•* T
On the development . front tte r s®^.f
ing and re-packaging-ofncw ted —
the Hong Kong producOvrtyreenI
Its laboratories ted techmc^
set to play a key teMk 4 Thf
also funds spteific tettn.... yw ^ TT ^
projects fa the academic sector. ff^^.v
- srty work Is now under way. f .
to develop computer software &m*rto
the testing of local microcWis. ^ g
Another domestic* acting
likely to prove «£
lance to Hong Kong’s lndustrini^^te^.-
the neighbouring, special
of Shenzhen, Just
border. Air each', some Sbtentte- I g$(b%^.
mw ty the Hong KongeensgmCT^nto*^-
-but Scope remains for heavre ryfin ktstaiy-
r— a^rieel castings plan t, f or. ./
applying Hong Kong's
sector, an up-stream toi Hong ^H^f >
downstream. . ■* . • .7*.
Ultimately. Hong Kong’s stieugth^J- ; ,
in its unit eosts. There, may -bfsTjjo ttt-,
holidays, but corporation
just 16.5 per cent. BusinessraeA*pi^%y>-
high rente tor accommodatioh^/Tja^
salaries tax is just 15 'per- teht; ; Wages -
may bo high by regional standa^&&» r
so is productivity and cash* Is kuig.v-Ih_r.
some other countries, says , ;fe
“when the Government wante.'tp;ln<fopv.
trialise, to modernise, they can-- motivate- :
people by saying ‘you are doing thfcrior .
your country.’ This is not .a. conhtrj.'
We can only tell them,' you-
this for your money." .
m
m
4 c .*-<
-y
:;V* *
>£ ^ .
4^:
,cy. - :
RESTRAINED TEXTILES TO U.S. '
WestLB
h teadfluaflflg:
RO: Box 1128
D-4O00 Dusseldorf 1
TbL (211) 826-01
EtanMunilffififii—
feL (611)25791
LondoaTei. 6386141
NewYofkm 754-9600
Tokyo. M 210-0581 "
WesiLB kitemadcmal S. A
Lmceimbouip.lbt 44 7411
WestLB Asia Limited,
Hong Kong. Tel. 5-259 206
Representative Offices:
Laiin-Amgiica OfTira
New York, Tel. 754-9620
Rio de Janeiro
Tel. 2624821
TbrantoJel. 8691085
Tokyo, M 213-1811
Melboume. Tel. 65416B5
Par U TO Wgr .s;
Banque
Franco -Altema ride SA
Paris. Tel. 5630109
Banco da Bahia
Inwestimemos SA
Rio de Janeiro
Tel. 2539723
WestLB can generate tiie resources needed
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Cotton- and man-made fibres:
Yarn and- fabrics
Apparel .......;
Miscellaneous -articles- i*-y. .
Wool textiles and clothing ...;.
• - • < .
Exports In 1981 ’ ; ; ' 'y. - '^-,r
Quantity . ‘
licensed ^-limit.^c
(’000 equiva- v '
: lenf sq yds) ^ . •:
147,706.4 -" * ^ ;
657,803.0 - :712^4T#- V
; *- 40,852.8 - -
'37,73&9 :• ^42Jff ■*'
—“"■‘b . . • .r...
.-Source: Hongkong ted. SfategharJlffi^..
' V: ’ *' "jvrilM} “
^'.fsuble.
Ror.s
. 0, hav.
• .Juni
■-iTifNdv b
Hi
; pairing nylon clofh
•f UFA ?t
4 r.pn-
.j Wo:*'
-'Pribi in
25 and
rvstfioffi
;■ aper? '**
{i lo he
’as 5-iro
; •’-“'-"■‘L’ 1 » vV‘" - :
m-.: ’4' V:. j-^7; 1
J
-a. -
; < A .®r.a
HONG ' KONG'S textile and as. well -as
garment sectors are the back- the garment .. 5ectbi^^:Tn;5lw
bone _*4ff ; its manufacturing the weaving sector -viaoteged
Industry. They account for; just .695m sq metres
over. 40 per.cent. of domestic fabrics, compared
exports, employ a comparable metres in 1980. TbeiteJte
proportion: of "the -manufactur- '..cotton yam last ^y;ear-bStopt
ing. sector woricforce, and make 126m kilos; comparedjyStir-.i 1
----- kilos in 1980.
this small, territory the largest
garment exporter in the world.
Textiles ted garments have
been a traditional Hong. Kong
business dating back well
beyond the Second eWorld War,
bid'lnrthosepr&war years weTe
something of a cottage Industry.
It was only after the- war that
industrialisation .soared, spurred
by the ' Communist' rise- to
power In China which : saw
many entrepreneurs, particu-
larly from Shanghai, moving to
Hong Kong and bringing; with
them the know-how and money
which they "applied to. the deve-
lopment of textiles ted other
tight manufacturing industries.
Garments were, in the early
days, veiy much the junior
branch of the industry. Accord-
ing to the report ;of Hong
Kong’s advisory committee on
diversification, there- - were ' in
1950 450 establishments, of
various sizes engaged locally in
cotton spinning, weaving, finish-
ing -and knitting.: They em-
ployed 25,1)00 workers, which
then represented some 30 per
cent of the manufacturing
sector workforce. . The clothing
industry had just. 40 'factories
and 2.000 woricers.
By 1976, when "a surge "Ih-
world demand for' denim drove
Hong Kong's apiming . -and
weaving factories up; .to their
production peaks, the spinning
sector alone employed- 25i000
workers, while, the weaving
sector employgd 37,000. - The
move up-market; towards higher
value-added operations had, -
however,! seen a. still '
fibre year production J-i
from 44m' kilos- in
• kilos in 1981.
The. decline of .tte tbL, ,
has coincided,. how?vte^
now-deflated property^' '
abling some indtisf'
take more profits .bn ;
their land thte "thL-
making from, using it fo
owii manufacturing :
That shift, argues. ; :Mi^t -
• ; -
TEXTILES vtfg;. tfc
Robert corn^a:-^
5 1 !
<Ta|
Horwajd, Director.'
Industry and Custbmsi^^6« ifc i;
seen as market
of to the general i
5 - “ When people said i R*
going out of
real estate .husiness r ’’ :; ;'jEbSl^?-. 'su
Mr Dorward,
.they had was ' zoned \
trial purposes. ThersSfet^K-
werel producing move
premises; foir-.up-tdwd
tries. The
were - being ■ builf
vacated, by. : the'.sui^f'j"
trifes, whielt strikes 'm# i
•.the salvation of -the ip——- ,- ri
world.; I wteh -%
happening 'in 2
.Tlaces.” ■
'. The outlookfoc
spinning and i
-mains unoertain/Dr?
chairman of -the--_
nowever.. seen a. still more
dramatic growth in the garment ?*?£?>.
sector. By 1976. its 8,000 fac- dusmaL
tories employed -253.000
workers;
dusrri'aL, said ia-ftls/-
statement that the. •'.acwnyp’r.- 1 - jrru,
“ *n a state of ^
ning and Veayirig ' sectei^;.? 1 . '
nlitthiTio . ... * - . " - ;*? .
•ground.” - •' :
"The question: «.&?■•
says Industry Comiuiiishl
Peter Tsao, 4 whether;.^h^^^J^
clothing
HK328.3bn
in 1980.
The mill sector — spinning and
accounted -. for
against HK823.3bn
weaving— has .in recent yeaTs mem sector ’^aiiy;.ne>»^?
been . declining in volume tenps locally-based jirimary - '
CONTINUED ON NEXT PAGE
.vl'
v.^St;
• ■ *• T *• V ,, * J ,
^ r
*?*”“ , T “”‘ “»*■* *■» 21 IMS
KONG xvn
.. »!••! «* •. / ..
xvn
INDUSTRY
in
Sfesj,
'■n St, *nefc’ *£ r 1
*U-avi tr
V ff,r insli^ :•
^2*S
HONG KONG bolds Hie key
to the outcome of Hie third.
W82-86, ‘ Multi-Fibre AxraJS
mart (MFA) that fa Uw
Jjrftnr negotiated in Brussels,
between the EEC and the 28
mainly lhird World textile
exporting- nations concerned.
* key, fer
rsmerBke a xntdear weapon
made -an the more fearsome
!>y «oppy security, there are
au too suoy detonator keys
Th! 3 : *ni,3 ■■ - ■ ■ Wtety of reasons, Hong
*^f 5 . .rale • In the world ’
t^ne. p-a. hacted hytt”
Vt . !>w *0r. 0 5<t : -V Agreement on Tariffs
J> end Trade, governing^
estimated 580bn ' worth of
trade Is eradaX.
-./ Hong Kong is the unofficial
yet acknowledged leader of
th e- 1 fo ur “ dominant ” pro-
ducer s tha t account for over
fear-tennis of all UFA
garment exports to the Enro-
peaiL Community— Taiwan fa
voiceless for obvious political
reasons, Macao’s interests
it* being submerged in *
Poringa^s wider EEC
aceesnpn stance and South
Korea looks to Hong
Kong’s : British ■ dominated
dyfi serviee for a negotiating
lead.' ■
in las iiaZ 1 ? ./v_,:As. for. the other MFA
r,: vnjf.| 1 Zr *.• .signatory countries now
^odaHoT S - /:. attempting to strike bi-lateral
J"" r ci'uj i r ** • - •'! MFA pacts whh the Europ ean ■
ji - Nl anfljrdX ' V Community, many of them
wb is kin. ? : deals to be achieved
«w jj. 5 ! •r;.’ 1 6 S‘/-«ms dominant suppliers
•univ 'in , V./ : wffttiie EEC as a vital factor
fil l pat, : 7 ;lhohq>ing the deals fiiey will
>■■■■ ^sf*. •'• V It is no - secret that Hong
rcDWrr L - Kong- Is also an increasingly
»■*»
Kong’s resolve.
Empean ' ' Commission
officials, who had known that
the restrictive negotiating
mandate handed down by
EEC member states would
ensure extremely tough talks,,
hut who had nevertheless
hoped for a single negotiat-
ing session with each MFA
country, coneeded that an
unscheduled “second round”
of MFA bOaterafa with the
honUInere would now be re-
quired in August and
September of jhi ff yew.
Not too much should be
mode of the skirmishing
victories against the EEC -
won by these and other MFA
MULTI-FIBRE
ARRANGEMENT
GILES MERRITT
W,
>ou arc d^:
0 U.S.
• 2-
1n|
militant leader. On June 15.-
- jqst a fortnight after arriving
in Brussels to open talks with
. . the European Commission,
' 'the Crown Colony’s
... . impressive 17-man delegation
flew home to await fresh
-. proposals from the EEC that
Restnif o -- eoidd form the basis of more
jwii . fruitful negotiations at a
MStqBfr. 'later stage.-.
Ivnisqib- ;-.'r -It- was' not,- both, sides
. stressed, a “walk-out” In the
3Il7l9i ,vv. dassk sense of the. term; but
H 2 .W 7 .ji . ;/•• with the EEC's demand for a*
TiUS).; .7 cuflback of up to 12 .per cent
4U4U r - ; .-.- . in sorn^e of Hong Kpng’s major
| n.;. 7 /-' garment export categories
^ - having been rejected out of
" hand. It Was at very least a
walk away ” from the nego- *
.^Hating table; ■ ■ - •
'•--Tfi Hong Kong could not, of
J^nzse, have afforded . such
»T*- militant gesture unless It
^had already been assured of
significant backing from
other MFAj prb do cere. That .
v negotiators- had: -.a. .
before returning :to
DeDti In similar Hrmii ii
Stances and that both rfhe
^de le ga tions of Malaysia and'
Singapore were -also nnder-
" /stood to be packing ffieir
--suitcases strengthened Himg
textile exporting countries in
the opening stages of the bi-
lateral discussions. The
European Community Is the
principal importer In the
MFA framework and is well
aware of its strength. Tech-
nically, it has until the end
of 1982 to play a waiting
game and force the hungry
textile exporters hack to
Brussels, for the exiting bi-
lateral deals struck under
MFA n do not ran out until
then.
Practically, the industrial-
ised Common Market coun-
tries being represented by the
Brussels Commission do not
hold all the high cards. For
the June 1982 creation of a
“ second round " of MFA
talks was by a number of
accounts no accidental flash
in the pan, nor is the EEC's
political ' position as the
powerful “client” of the
MFA countries so unassail-
able as is sometimes
suggested.
The common front being
presented to the EEC by the
MFA hardliners dates back to
November 1980— although it
could equally be said it
stems from . 1977 and the
..-imposition of a stern MFA n
-s package by the EEC that
" reversed the original 1973
MFA’s character as a system
for liberalising and encourag-
ing thh Third World’s textiles
export warnings.
It w»% /however, the agree-
ment Af-most MFA exporters
an the /Bogota Paper some IS
months .ago that forged a new
MMai^khidij then as now,
» is aim^ ^ denying the EEC
the nse' (If; diride-and-rale
tactics. Forged to some extent
out of Indonesia’s successful
or
3r
Mill sector
CONTINUED FROM PREVIOUS PAGE
rc!;:v
r-rK
TILES
,. cT TR3J' {.
, ; • T;<."
. 1 .. -
r
.'■v J : t V
jr. : ~ : :
-
, •i: i ’V
.. o:
...-
//•i',fV ; -';
• I - ' '•
- to support it. There
-is?nD answer yet” -
But Mr Tsao does see some
encouraging signs for reinvest-
ment ' of property profits in tex-
particularly a revival of
1 interest in the dyeing and fin-
■ IAmg sector. “ The propetry
.' market Is no longer active,” he
- saysi -Land !s much cheaper.
Honey la lying around not do-
lag: anything, it has tobein-
;■ vested;'' and' what better place to
invest than in something which
Ihey'nsed to do?
' -’ '/Che growth of Hong Kong’s
ganneht-indostry has been led
by a^teady progress mp-market
'tdwatds higher value-added
'goods. It how has its own bd^i-
L fastuon designers, its . manu-
facturers of designer-label
^uods,' mid its supply lines to
stores- ' as ■ prestigious- as
. Harrod’s of London.
’ -Overall, says Mr Tsao, -the
textile, and garment sector
relative -to the economy as a
vbole has reached a Level at
which he would be happy to see
' k stabilise for some years to
come. “ We’ve found our niche
. it fa a very comfortable
oit to be. in as far as
development is con-
. icenieid, because we have a solid
stable fcase.”
_ - While the up-market move-
'ment into fashion, goods has
fkept Hong Kong a' step ahead
\pf its. regional competition, it
: im also. made tfae outlook for
%e. industry more difficult to
- Order books for basic
clothing' items used to run six
/to.- eight months ahead, so it
•WQtLki now be. possible to speak
With, some confidence about
..sector, performance for the
.whole of the current year. -
L :.-.For: fashion items,- buyers
-pfece . 'quick., short orders and
demand -fast, replenishment if
: the line sells, so the outlook is
more.- difficult to judge. But
expectations are. that this year,
will Jbe a. poor one .for the
Industry, -wtoi some- . manufac-
turers already running : con-
tracts at loOT-maltine prices, and-
- protectionism binding markets
* ever, titter.:. .
Hong." Kong’s textile and
^ garment industry is an exoort-
' ing industry wholly dependent
oik the openn«® of its over-
seas-markets. The key to those
Tnyrtefs: is - the sO'Called “Multi-
. Fibre- Arrangement” fHFA), a
States and the EEC, which
between them take 61 per cent
of its domestic exports. A
bilateral agreement was con-
cluded with the United States
in March, on terms which Hong
Kong regarded as uncomfort-
ably tough bat as good as could
realistically have been expected.
The nature of the- agreement
was to restrain, severely growth
of exports of sensitive iteims-^
in other words, all of those
where Hong Kong had in past
years used its quotas to the
full — while- freeing from
restraint other categories of
relatively less importance. The
overall effect of that deal,
estimated financial secretary Ur
John Bremridge, would be to
trim the forecast growth rate
of domestic exports to the U.S.
by approximately one per cent
Currently, Hong Kong is in
the throes of far less palatable
negotiations with the EEC,
-facing apparently uncompromis-
ing ■ demands for substantial
quota cutbacks. Hong Kong was,
in turn, insisting that cutbacks
could not be tn&erated.
Far apart
Hong Kong’s Trade Commis-
sioner. Mr Lawrence Mills,
entered the talks saying that
the two sides were as far apart
as Brussels and Kowloon-—
going the wrong way round.
The mood in Hong Kong w®s
one of not only commercial
foreboding but also moral out-
rage. Mr Darward said erf the
EEC’s stand: “Its callous dis-
regard is causing very real
threats to the maintenance of j
any kind of respect for inter-
national obligations.”
- The fear also Intrades that
if the EEC did impose Its quota
cutbacks, other trading part-
ners, not least the U.S., might
demand a rewriting of agree-
ments to gain similarly
increased protection for their
own markets.
There is little that Hong
Kong" can do against protec -
tio n i«m, since the Government
believes that any retaliatory
moves to restrict access to its
own market would compound
the . problem rather than pro-
voke a solution.
The local textile industry can
at least draw upon many years
as-?® SHsa
ttEiKSt qaymi m leap
expoorrmSSs are- tfae United specific protectionist bamers.
challenge to the “reasonable
departures” restraints being
Imposed on it under MFA H
— -the Jakarta Government
held to ransom a mix of
unrelated -British capital pro-
jects until ft gained satisfac-
tion— the textile exporters'
Bogota blueprint fa for a
collective ‘stand against EEC
protectionism.
A glance at the potential
'damage to Hong Kong's still
thriving economy— vastly
“ more resilient than those of
most of its" MFA allies—
gives an indication of how
much the textile and garment
: exporting countries have at
stake.' Over 40 per cent of
Hong Kong’s domestic eyport
eaziungs, and almost . pre
r dsely the same proportion of
1 Its manufacturing sector -
employment of 1m people,' is
accounted for by textiles and
dotting.
Almost a quarter of ■ the
Crown Colony’s grass
dom estic product is in the
industry, and such have been
Hong Kong’s efforts to trade
upwards into the quality end
of the clothing business to
escape competition from
cheaper producers, it is now
bring calculated that cuts In
. its volume of sales to the
EEC would have a dispropor-
tionately harsh effect on over-
all export earnings.
In other words, a 10 per
cent cutback bn the Crown
Colony’s level of some
HKflObn worth of elothing
and textiles sales to the
European Community would
involve a reduction of around
10 per cent in foreign
exchange earnings.
Hong. Kong’s economic
problems, 'despite its well-
known refugee and housing
difficulties, have in the past
had an unreal quality in the
eyes of other hard-pressed
nations, both developing and
developed: - - . after all, a
Government that runs a
budget s ur p lus presides over
an. economy. that Is not as
others are. . That was the
argument that In the 1977
MFA renewal talks permitted
the EEC to single out the
dominant producers as less
deserving of generous -terms
titan the genuinely Third
World prodneers.
Hong Kong's " determined
campaign since then to print
out to the. other' MFA coun-
tries that they did not benefit
through larger quotas and
easier access from the slack
that those cutbacks on the
Crown Colony should have ■
nroduc*d — that Instead it was
the EEC's less . competitive
garment producers that
gained— has done much to
strengthen the new solidarity.
Few observers, though,
would care to guess the final
outcome of the MFA nego-
tiating rounds. Wang pd on the
one side are the newly-,
cohesive textile producers,
while entrenched on the other
are the . governments of the
talks
Ten who know that the terms
of MFA XXX could have a
direct impact on the speed
with which approaching half
of the EEC’s four million or
so textiles and clothing jobs
will disappear during the
1989s to fuel further their -
crisis-level dole queues.
Perhaps more important
than that is the realisation on
both sides that the Multi-
Fibre Arrangement Is no
longer Just about textiles.' It
Is more and more being seen
as a test case for the future
or the world trading system
born out of successive post-
war liberalisations and now
under protectionist threat
That knowledge, Hong
Kong’s senior government
officials privately point out
could be the MFA exporters’
ace in the hole. For although
EEC. governments have agreed
that they will only ratify the
new MFA m framework
protocol agreed six months
ago in Geneva If tfae bilateral
deals that give it substance
are M satisfactory,” collapse of
the MFA system would pre-
sumably involve EEC uni-
lateral measures to meter
textile imports instead.
Such moves would be at
best questionable under the
Gatt, and difficult for EEC
governments to defend at the
forthcoming Gatt ministerial
talks in Geneva in November
this year that are already
being heralded as vital to the
defence of free trade.
Shirts for export in the Crocodile shirt factory , one of Hong Kong's
leading shirt manufacttirers
How to mate a mountain
Why. you might ask yourself, should I come to a tiny place on
the soy th. coast of China to set up a factory?
The arguments are sufficiently good to have persuaded more
than 400 overseas companies to invest in Hong Kong’s industry'to
produce top quality goods and components.
First and foremost, the Hong Kong Government keeps red tape
to a minimum, leaving businessmen free 1 to go about their business.
Corporation tax stands at a modest 1 6Yz% and there is no
control over company ownership, no customs duty and no
restrictions on profits which can be freely converted into any
currency.
Then there’s our skilled one million-strong industrial labour force
whose wages are determined by supply and demand and a
maximum salaries tax of 1 5%. Which is why. small though it is.
Hong. Kong is a place to be reckoned with.
So. if you're considering Hong Kong as a home for your
manufacturing operation, contact us.
You never know, you could soon be making your mountain out
of our molehill, g H H H
Hong Kong Department of Industry
Section 12;
Industrial Promotion Office.
6 Grafton Street. London WIX 3LB
Tel: (01 ) 499-9821 Telex: 28404
- The Industrial Investment Advisers.
K V ' . i'O&i
Ipaatneirs. Totiiat end,itmain- :
tains a register Of Jocal^com- -■
panics -iniereked ; . in^upgraSm^-
th eir. production. methods with:
overseas technology,, and over-
seas companies; : interested m .
Hong Kong. / -V _ _ •
" Industrial- innsstment pro- ,
inotion workis iw>t immediate.’’ ;
saysMr WOTigi ^Some ;com- ;
paiiies, may take/flve’yeais to:
come to a ae^tiye conclusion. :
We may not -'see' any concrete;
results -.after, ay ear’s -work -but -
ire can't Just' sit idla-We need-
to r go ^brpad' and brings in the.;
new; technology.” ' . .. j
With offk«ln Hon* Knag. M»a*. SJnp»jx*c. MJm-ii, AiuuaLnia, Europe and. ihe
• ' “ limtedbuiesof Aroaka.
xvm
•. Fmand^\3M 21 ;1982 .
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Telephone: 5-265237
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HONG KONG XVIII
1/
Campaign to strengthen technology
ALTHOUGH HONG KONG is
commercially such an inter-
national city, foreign direct
investment has. made a surpris-
ingly modest penetration into
local manufacturing : industry.
Out of some 50,000- local
factories, overseas investors
account for just 400. That
figure does, however, exclude
the extensive presence in Hong
Kong of Chinese, interests.
The UJS. was the' largest
foreign investing country,
according to a year end 1981
survey conducted by the Hong
Kong Government with
HK$3bn invested in 11 estab-
lishments. Second is Japan,
with HK$2.2bn.. Those two
countries . between diem
account for thre'equarters of
FOREIGN
INVESTMENT
ROBERT COTTRELL
the total HKfTbn foreign in-
vestment in Hong Kong's manu-
facturing facilities.
Britain comes a poor third
with HK$486m invested, fol-
lowed by Switzerland, the
Netherlands, Denmark, Austra-
lia. Singapore, Taiwan and then
France.
As well as being the largest
single investing nation, the
U.S. also favoured larger
average investments per estab-
lishment — twa-and-a-half times
the average HKSllm British
investment
Looked at on an industry-by-
industry basis, electronics has
received HK$2.7bn foreign
investment: textiles, a larger
and more mature industry, bas
received HK$868m, followed by
electrical products,, chemicals,
watches, food, metals, toys.
building and printing.
While Hong Kong's economic
growth over the last decade can
scarcely be said to have -suf-
fered unduly from a lack of
foreign investment attracting
overseas companies is receiving
top priority nowadays, sot so
much ‘ -because Hong Kong
needs cash, as because to build
its industries of the future it
needs know-how.
“We want new technology.”
says Mr Paul Wong, the Govern-
ment's chief executive for
industrial promotion, 'we want
technical skills, marketing
techniques, management tech-
niques. We like to have the
stimulus, the imeptus . to
develop new ideas.” ■
■' The industrial promotion divi-
sion, part of the trade, indus-
try and customs department, is
following through its desire to
attract new investors with the
opening of offices around the
world staffed by a divisional
officer for the. region.
The first such office, in Japan,
was formally opened in March,
although groundwork began
last November. A London -office
— within the Hong Kong Gov-
ernment office In Grafton
Street — opens this month, dir-
ected at the UK and Scandina-
via. An officer is now stationed
in Stuttgart preparing the
ground for an office to -liaise,
with continental Europe, while
another office will be opening
in San Francisco.
“ We have to go out and sell
ourselves." says Mr Wong; “ we
believe that we must promote
actively. It is not enough to sit
and wait for customers to
come.”
Hong Kong’s selling points
are. says Mr Wong, that it is
“the Ideal type of investment
environment — very good geo-
graphical location, terrific port,
third largest container terminal
in the world, and a very hard-
working labour force. It is a
very competitive environment.
The computer centre operated by the Swire Group
The Government itself believes
in the profit motive. Doing busi-
ness and making profit is not a
■ dirty word.".:
As an additional attraction,
he says, investors may see “a
very great potential for doing
business with China. Through
Hong Kong they' will be able
to approach Chinese corpora-
tions to do more business in
China. It is a gateway.”
It is- only on such, arguments
that Hong Kong can be sold,
for the government has no cash
incentives and soft loan pack-
ages to lore investors. 'Recognis-
ing, however, the singularity of
Hong Kong^; limited land space
and high land prices, it is. how-
ever, willing to negotiate the
provision of a tract of land at
below market price to a desired
investor.
While there Is a formal gov-
ernment policy, of non-direction
of investment tir Hong Kong,
the influential report of the
advisory committee on diversifi-
cation, published in 1979,
looked towards an economy less
dependent on textiles and gar-
ments.
Diversification away from but
Vat at the expense of the tex-
tile and garment sector is now.
something of an article of faith,
with the emphasis^ on higher
technology industries. That,
coupled with” 'a' ' limitation of
resources, means that the in-
dustrial promotion effort tends
to target higher-technology
companies. : .
“When we say ‘target,’”
says Mr Wong, “if is only be-
cause we have a manpower
problem. We can’t go and see
every industry and every com-
pany.” -- ir ■
Hong Kong’s size and policies
themselves contribute, to the
-fluentiai as places like .Japan,’*
• he rsaysr M soithat-^
_.vate, invent rproductand create.
. .a- demand^f peopte to
- irtiyvit,-- useit, -accept :it . * =y. V lt~
: takes b . wh^e'-djiEerest -:kind
■at gdvennn^-:-jfaiI ^cphy to-
- malm, that happen.-' Because you
!• ■ must- have adegi'eeaf support* .
you must have-a domestic* mar- ;
ket to support St,., which means
u you have tO'l restrict -imports
■* td get ‘the thing 'goings - .•;'>/ * -
- are not tug enough,”
. says Mr Tsao* “to do the re-
' search ' work to ' create techno-
_ ] ogles. We do -what the Japan-
•' ese used to do. either buy them
- or get the companies, to come
to Hong - Kong, ; .because, 'by-
bringing their' ■ technology to ,
Hong Kong.Mhey can make
'more- money. It is as simple, as
.that, there is ,no phUos^hical
merit to investing in Hong
Kong. The cash is. here, all you
need to- do is bring your tech-_;
nology.” ’ •
To put that message across,;
the industrial promotion !. divi-
sion supplements its' overseas,
offices with missuras-Ltwo r .this •
.month, to ScSndinaviai and the'
; United _ States^ vi^t ^eanget l
companies.-:'.,' . r' 'r;
“ Companies,” says Iff' Tfooz ig,
“ which we believe in ; from ,
examination of their records,.-
from -what they jHroduce, , _from -
their level'-of. technology, ^have
. a great- oppOrtunity for deve^
lopmeht hpre:’*. The divlsttQn’has
an. “ indicative fist ”;-of indus- ,
tries which . ; It-, wbuld particu-
larly like tn attract, but under -
very .broad headings ? elecs
. tromes, pi^cision: moulding , for :
Instance: ‘ .*'• • . : '
..-As to .response,. Mr .Wong,
reports that tie' Japanese office,
still- in its very early days, has
shown “most encouraging
ground for aur promotion. . ..
The computer<ohtrolled telex exchange f at Cable & Wireless
Well over a
to local
service
of
The Hong Kong Chamber of
Commerce comprises some
2,600 member companies.
On- their behalf, it provides
representation on govern-
ment and other official bodies,
corporate services, and a
channel for general com-
munication between the
business sector and the local
community as a whole. It is
Hong- Kong’s oldest trade and
industrial association and was
founded in 1861.
The activities of the
' Chamber last year included a
mission to the U.S„ present-
ing Hong Kong's potential to
aver 1,000 businessmen there;
seven baying and selling mis-
sions to 15 countries organis-
ing contacts with Chinese
official bodies; and making
submissions to the Govern-
ment on topics including com-
pany law, the British
Nationality Act, and civil
service pay.
The chamber is run by a
council which _ includes
other senior businessmen
with particular ' areas of
expertise. Beneath it Is a net-
work of . committees con-
cerned with particular issues
under the broad headings of
trade, local affairs, and
industry. The chamber has a
permanent director, Mr
Jimmy McGregor, who pre-
sides over about 70 staff.
On a day-today basis, the
chamber handles inquiries
from potential overseas trad-
ing partners— some 15,000
per year— which ft refers to
members on a rota basis. It is
willing to mediate in trade
disputes, and has the capacity
to act as a legal arbitrator.
On a community relations
level, the chamber offers
educational scholarships to
local candidates: maintains a
standing fund to offer cash
rewards to citizens
the police in the fight against
crime: and administers a
charitable trust to assist
public servants and their
dependants injured or killed
while on duty.
TRADE DEVELOPMENT .
COUNCIL •
While the Chamber of Com-
merce is funded from mem-',
bers’ subscriptions, the Hong
Kong Trade Development
Council was established by
government in 1966 with
funding from an ad valorem
levy on exports and imports
plus an annual government
grant -
Its chairman and director —
currently Mr Y. K. Kan and
Mr Lew Donning respectively .
— are appointed by the Gover-
nor, and ft Is responsible for
promoting Internationa] trade
with a particular emphasis
on exports. The TDC has .22
overseas offices phis represen-
tatives in three ether cities,
and last year it organised 70
major projects including
.sales missions and participa-
tion in overseas trade fairs.
It has four regular local
publications, and produces a
series of foreign-language
newsletters to keep overseas
businessmen informed about
HOng Kong affairs.
The TOC’s head office .is
organised Into four depart-
ments. The research depart-
ment undertakes market and
product analysis, providing
the council with data to draw
up its own promotion plans
and local businessmen with
market information. The
publicity department looks
after TDC publications and
publicity, while the design
department concerns itself
with the council’s visual
image.
The fourth department,
trade services; is divided into
two sections. The overseas
section organises promotional
projects approved by the
council; while working with
the research department to
advise the council of oppor-
tunities for developing Hong
Kong trade further.
The local section looks
after trade inquiries, local
promotions and . Incoming
missions. Its staff include a
field section which concen-
trates on publicising and pro-
moting the council's services
by personal visits to trade
associations,, factories ' and
companies.
In 1950-81 the TDC handled
116,101 inquiries comprising
53,258 from overseas. 55,263
local companies seeking local
CHAMBER OF
COMMERCE
ROBERT COTTRELL
suppliers, and 7,580 local
businessmen seeking export
outlets.
STANDARDS AND
CALIBRATION LABORATORY
Hong Kong's. Standards and
Calibration Laboratory has
its roots, in the advisory com-
mittee for diversification,
whose' Influential jreport pub-
lished _ In 1979 looked at
potential for local economic
growth aqd in particular the
infrastructure needed to sup-
port a more broadly-based
economy.
One of its findings was a
“ seridns inadequacy of Indus-
trial support facilities and of
technical back-up services.” .
and it recommended - that
government establish a
primary standards laboratory
catering initially for electri-
cal and electronic standards,
but with potential for expan-
sion. into other fields.
While a calibration labor-
story might sound a rather
abstract concept;: it fulfils an
immediate concrete and local
need by maintaining refer-
ence measurements for apptir
cation to manufacturing In-
dustry. Electronic compon-
ents in particular must be
• finished within microscopic-
ally fine tolerances, not only
so that , the output from any
one plant is standardised, but
so that it may be compatible
with production from plants
elsewhere 1 in the world. .
The absolute benchmark
standards of, for instance,
voltage or mass, are the so-
called M primary standard ”
maintained in a handful of
national institutions and cor- .
rect to a few parts per
million or even less.
Whereas a few years ago
Hong Kong was ...merely
assembling consumer elec-
tronics goods it now manufac-
tures its own silicon chips,
and the quality of lueally-
available reference standards
has become critical. At
present, equipment such as
atomic clocks accurate to a
second in 4,000 years may be
borrowed from national
laboratories for local check-
ing, or local equipment
despatched back to national
laboratories for fine-tuning.
The team setting up the
Hong Kong laboratory Is
headed by Mr Brian Tyler,
who expects it to open in in-
terim premises in mid-1983.
It will act as a back-stop to
the 15 or 20 laboratories
operating locally in the pri-
vate sector, and will periodic-
ally eheck its own standards
against the still more precise
ones maintained In for. in-
stance the U.S^ Britain a«d '
Australia..: *
While geared In Its initial
stages to electronic stan-
dards; the Hong Kong lab-
oratory will also contain a
temperature calibration fac-
ility, and . will house local ..
reference standards for mas
and length.
Collier Redy
Chartered Surveyed :
.COLLIERS
; Inttmaonml ftnpcrty Consultant.
17 SF Wing On Centre. U I Connaught Road C.. Hong Kong,
" Tel: 5-43 126 1' Tclisc 63334 PETTY HX.
Additional copies of
SURVEY
please contact;
. Freddy Wadsworth
802 FarEastExehaDge.Btdldiiig^
\8 WyndhamStreet '
. ;Hong;Kong Tel: 5-226843 : s
fCIIve Radford ...
Rmancial- Times .
Bracken: House
10 Cannon Street
Londoia EdQP 4BY
TetVbl-24S 8000
Financial Times Monday Juno 21 1982
HONG KONG XIX
industry
! HONG KONG’S shipping indus-
[ try represents just under 10 per
cent of the world's merchant
' marine fleet. At the end of last
year, Hong Kong shipowners
: could between them muster
nearly 57m dwt, made up of
more than 1.500 ships, the
biggest single portion of which
— almost half — was bulk
carriers registered under
Liberian or Panamanian flags.
Expansion has been little
short of meteoric in recent
years, in line with much else of
commercial value in the colony.
And a number of shipping
companies will be adding sub-
. stantially to their tonnage this
year and next But the signs
are that fleet expansion will
follow a more sedate route
from now on, as supply over-
takes demand and Hong Kong's
newly emerged shipowners reach
. some sort of first base maturity.
Asian freight markets
weakened visibly in the second
half of 1981, and few observers
see any chance of a significant
recovery until well into 1983.
Hong * Kong owners are
continuing to reduce their
dependence on Japan as a
source of chartering-out
tonnage, and a number of
major companies are looking
increasingly towards Europe as
a means of diversifying trade
flow’s.
According to recent state-
ments from Sir Yu e-Kong Pao
— Hong Kong's largest fleet
owner with over 200 ships
totalling 200m dwt, including
those on order— currency
chaos, falling trade volumes
and high inflation, and interest
. rates are likely to continue to
cloud the Asian shipping
picture for some time to come.
The outlook for shipping in
Hong Kong is conditioned
almost as much by its structure
as the prevailing trade winds.
And in this respect the reasons
for the rapid growth of the
industry is worth closer inspec-
- tion. Hong Kong shipping In its
modem sense has its origins in
• ' Japanese demand for ships, a
• very favourable tax position,
the rise of the Asia dollar
market and natural entrepre-
neurial flair.
At the beginning of the 1970s
a highly profitable mutual co-
operation was struck up
between the all-powerful
Japanese trading bouses and the
■ Hong Kong maritime community.
' Japan needed a seaborne trans-
i port and saw a way of getting it
through Hong Kong that was far
cheaper — more cash-flow effi-
> cent — than using indigenous
shipping trades.
The system that evolved is
Sir Yue Kong Poo , chairman of Intertanko and of World Wide Shipping seen in his head office in Song Kong and the Ocean T ermxnai, Kowloon
Fleet expansion will be at a less hectic pace
: » phjnnifiir ♦« -hp «F Honff Kone*s recent attemnts usual feature of the deal is that assets equivalent to «800m at operations In the JJK in 1980. Caw
known as " shDcumisen.” Under
such a deal, ships ordered by a
Hong Kong owner would be
built in a Japanese yard to the
specification of a Japanese
charterer. On delivery, the ship
would be entered into a long
. time charter that would have
been planned before the keel
was laid.
The system allowed Japanese
charterers to create tonnage
financed by foreign debt at a
time when Bank of Japan curbs
disallowed such a move by a
domestic buyer. It also plugged
Japanese seaborne demand into
the advantages of flag of con-
venience shipping with its atten-
dant low operating costs.
The Japanese trading houses
provided all the necessary intro-
ductions and pulled aU the
financial threads together. In
certain instances, they were
SHIPPING
JBFFREY BROWN
even known to act as the
exporter of a vessel, providing
any ** top up ” finance that the
banks could not handle.
For its part, the Hong Kong
shipping community lost no
time in supplying the necces-
sary enterpreneurial flair,
helped by a tax background that
made rival shipowners in other
parts of the world grind their
teeth in envy. Most Hong Kong
shipping companies pay little or
no corporate tax. When a
liability is due, it is levied at
17 per cent— in striking contrast
to the 40 per cent to 50 per cent
flat corporate rate faced by
other shipping industries.
The Japanese connection has
been a critical influence on the
growth of Hong Kong shipping.
The percentage of Japanese
cargo carried by chartered
foreign flag tonnage in external
seaborne trades, rase from
around a quarter in 1975 to 35
per cent by 1980. At the same
time, something like half of the
Hong Kong merchant fleet is
estimated to be on charter to
Japaa
However, the Hong Kong-
Japan shipping axis is now
showing signs of strain — partly
as a result of tonnage over-
capacity in Hong Kong and
partly stemming from the falter-
ing Japanese economy and
measures taken inside Japan to
blunt the attractions of leasing
deals along the lines of the
shikumisen.
Unabashed, Hong Kong’s
shipping magnates look to be
pasting around successfully for
new roles. One of the most im-
portant of these has centred on
increased -links with mai n land
China. At the same time some
shipping companies -have dipped
a vigorous toe in the open
market, picking up a number of
five-year tim^ charters with
major oil companies.
One of the most eye-catching
of Hong Kong's -recent attempts
to diversify away from Japanese
trade centres on the fonnation
last year of United Shipping and
Investment Company. This is a
tripartite venture involving the
Bank of Japan, World Inter-
national and mainland China.
This is the first time that the
Chinese -have set up a private
commercial venture outside the
People’s Republic, and the un-
usual feature of the deal is that
they have accepted a minority
shareholding, content to sit on
just 45 per cent of the invested
capital. Moreover, the manage-
ment team is headed from. Hong
Kong with Sir Yue-Kong Pao
- raging the chair. .
As for the individual com-
panies, World International
remains by far the biggest and
most prestigious with net fleet
assets equivalent to 9800m at
the last -balance sheet date —
March, 1931 — and total tangible
assets closer to $1.4bn. The com-
pany has ■ extensive interests in
property, insurance and finan-
cial services, hut shipping still
accounts for some 75 per cent
of total profits.
Orient Overseas Container is
another major group, having
acquired the Furness Withy
. operations in the UK in 1980.
Barely nine years- old, OOC is
incr easing ly regarded "as part of
Hong Kong's, shipping -establish-
ment. Sadly, its founder, Mr C.
Y. Tung died earlier this year.
nin acquisition of the Furness
group ' . for ' $200m . was a
considerable coup.
Wah Kwong has been one of
the fastest growing fleets in
recent years, and so too has
Carrian Investments whose
recent merger with Grand
Marine Holdings has propenwl
Carrian into the top flight of
ship owners. Wah Kwong^s
present fleet— much of it owned
with local partners <* foreign
charterers— comprises 44 ships
of some 4m dwt. A further 24
ships of around L5m dwt are
on order with value in the
region of 3460m.
COMMERCIAL CARGO
Tonnage carried
Year Imports Exports Imports Exports
1977 ... 70,639 113,374 19,112,226 6,525,061
1978 ... 91,307 137,624 20,909,017 6,923,416
1979 ... 107,019 150,389 22,598,774 7,711,080
1980 ... 105,200 152.666 24,622^06 8,936,622
1981 ... 121.405 168,900 26.448,318 9,170,622
Tonnes
Land
Imports Exports
1,527,415 1*202
1,900,908 3,993
2,022^06 58,046
2,072,726 184,710
1,998,232 306,450
Established in Hong Kong in 1 889, The- Hongkong
Land Company Ltd is today one of the most valuable
property-based companies in the world with total assets
exceeding HK$ 25,900 million.
Hongkong Land owns some 9 million sq. ft of
lettable space throughout the Pacific region. Its prime
portfolio comprises 3 million sq. ft of commercial space
in the heart of the central business district of Hong Kong.
By 1 987, developments in progress will have increased
this city centre holding to 5.2 million sq. ft.
Hongkong Land's Dairy Farm Group of Companies
operates throughout the Pacific region, in Australasia and
in the People's Republic of China, in airline catering and
in food production and distribution, together with more
than 200 supermarkets and retail outlets.
Hongkong Land's portfnfioof properties and developments in. progress
in the centra! business district; Hong'.Kohg.
: Hongkong Land's Mandarin International Hotels
develops and operates luxury and first class hotels. They-
include two of the world's finest — The Mandarin* Hong
Kong and The Oriental ^ Bangkok. With fOur new projects
in hand the Company'sriatest to be- announced is The
Vancouver Mandariri; ‘ ‘ : . • ’’
- Hongkong Land, Dairy Farm and Mandarin International
Hotels make up the three main operating divisions of. - . .
The Hongkong Land Group, which - also holds major interests
in trading and utilities.
Hongkong Land . is quoted oh the Hong Kong and
Singapore stock exchanges and i.s listed in London.
For a copy of the Annual Report, please write to The.
Hongkong Land Company Ltd, Alexandra House, Hong Kong.
The Hongkong Land Group
Hongkong Land • Mandarin International Hotels • Dairy Farm
HONG KONG XX
Financial- Times Monday- Jime 21-19?2
- : ■ - -rvmTTCtrpio^?- 'J' -
As demand for traditional audio equipment tails off manufacturers turn to products of higher value-added content
\ •- ;■ 1 *■&.
Electronics concerns
A FEW YEARS ago (he
average unit eost of elec-
tronic equipment produced in
Hong Kong was about
US$6. Today, the figure is
closer to US$60 as the indus-
try struggles up-market in an
effort to fend off competition
from lower-cost producing
countries in the Far East
Margins in some areas' are
under pressure at a time
when sales have been hit by
the recession. Yet overall
the industry is expected to
show a growth rate of
between 10 and 12 per cent
this year, with export earn-
ings of around HKS 17. aha.
Manufacturing patterns are
changing fast As demand
for traditional audio products
— which still form the main-
stay of the industry at 75 per
cent of total output — tails off,
manufacturers are shifting
their sights towards items
with a higher value-added
content.
Computer components, tele-
vision sets and a bewildering
range of telephone gadgetry
are becoming the produets of
the future. A measure of the
fast-moving nature of the
business is that sales of tele-
phone equipment arc ex-
pected to rise tenfold this
year because or deregulation
in the U.S. market and signs
of a more liberal approach to
imports In EEC countries.
It is not unusual to see
executives of Hong Kong’s
more aggressive electronics
concerns literally running
from office to office. “ It is a
young man’s game” said one
of them recently. Fads still
dominate - the market-— none
more so than the craze for
television and video games
which has proved a bonanza
for companies assembling
under licence for Atari and
Mattel, the two big names In
the U.S.
At the same time, industry,
leaders like Conic Invest-
ments, which last year became
only the second electronics
firm to seek a stock exchange
listing, arc doing much to
change the industry's image.
Conic now spends an in-
creasing share of its sales
turnover on research and
development and markets a
wide range of products under
its own brand names. The
company was also' one of the
first to move into the market
for 14-lncb black and white
television sets, a large pro-
portion of which are
assembled and sold in China.
Small factory outlets still
predominate in an economy
that by ' tradition has
favoured the little man. But
several of Che bigger con-
cerns are beginning to con-
trol an increasingly lucrative
share . of total output as
research costs mount and the
pressure -to move up-market
intensifies.
Export of finished products
and components worth
ELECTRONICS
NIGEL GIBSON
HK$15.7hn accounted for just
under 20 per cent of- Hong
Kong's domestic exports in
1981, putting electronics into
second place behind clothing
and textiles as the manufac-
turing sector's two largest
earners. Last year electronics
firms employed 95.000 workers
in some 1115 factories
throughout the territory.
Mach of the industry Is
now concentrated in Kwun
Tong, a new town in the
New Territories at the end
of the mass transit rail-
way, attempting to become
Hong Kong’s answer to Cali-
fornia's Silicon Yolley. De-
spite a steady rise in wages,
there is still little real incen-
tive to automate.
HONG
KONG
TRADE
FAIR
18th-23id
Thomas Cook are the official travel agents for
the 1982 Hong Kong Trade Fair. In co-operation with
British Caledonian, the official airline, they are
offering inclusive travel arrangements with reduced
rates for air fares and accommodation.
Prices start from £596 (with twin-bedded
rooms and private bath) and the packages include '
return scheduled air fare, transfers, accommodation,
and the services of a special information desk
duringtheFair.
Two tours are available: one of seven nights for
visitors to the Fair; and one of twenty'two days to .
allow exhibitors time to set up stands as well as
attend the fair. There is a choice of six hotels, tool
For full details contact your local Thomas.Cook
Travel Shop, or write to Thomas Cook Group Travel,
P0 Box 36, Thorpe Wbod, Peterborough PE3 6SB.
Tel: 0733 502596.
A- shortage of skilled staff
has begun. to fait certain areas
like watchmaking, but here
the' trend is towards assembly ’
across the border In China’s
special economic zones, where
labour costs are as much as
20 per -cent less than those
In Hong Kong. '
Even so, some companies
at the sharp end of the com-
petitive wedge are startingto
import Japanese-made robots
as a- way of reducing over-
heads and, perhaps more im-
portantly, of maintaining
quality. .
A number of high-techno-
logy employers like the' Digi-
tal Equipment Corporation in
the U.S. have also floated
plans for raising the -level of
product development- in ,th'e
colony, but ambitious moves
in . this direction have been
shelved until the U.S. econ-
omy emerges from recession. .
Plans laid hy the Hong
Kong Government last year
for giving Industry a helping
hand up the high technology
ladder by means of a fresh .*'
injection of foreign capital
look destined, for the present
at least, to fall viettm to the
same cutbacks in spending.*
Government figures on the
level of overseas funding are
sketchy, hut a survey of 395
electronics companies last
year suggested that about
HK$2.67bn had been ploughed
into the sector.
Earlier this year two local-
ly-hacked companies. Elcap.
and ACL Semiconductor, took
wbat was described at the*,
time as a “ giant step forward
for the industry” in starting
up production of micro-pro-
cessor chips, -now the build:
ing blocks of almost every
electronic product Benefits -
being, tooted by the fledgling
shipmakers include those of
made-to-order manufacture
and cheaper transport costs.
Even so, tbey face formid-
able problems, suppliers of
chip-making equipment in the
U.S. and- Japan are reluctant
to commit their engineers to
the 'colony before demand .
grows and both companies ,
have to import nearly all their
*5^*'
'pjiff c ;;
•'’YY*- iSi s
:r. & v.
KiTi'- .1.
Ur*- -
W fi'-'
, ^ aijlfisfi
mm% v., - ■ *
m-/' .■>* ....
. . -:jr
.fsP- V.
H
7* fl: -
. 1
-rfi
mmm
.
— -W*
fen
Laying out printed circuits at Ampex CompiUers
sov
raw materials and chemicals.
. As one manufacturer put it:
“ I can see the plants being
useful back-door source of
: technology for China, but it is
doubtful whether there will
be any real demand for their
products in Hong Kong.'*
Land costs, despite a recent
fall In property values, still
constitute a serions handicap
for electronics concerns who
are forced to rely more and
more on their reputation for
productivity to stay ahead.
Margins in areas like audio
producas and calculators are
being pared, and it can only
be a matter of time before -
producers are forced to dump
unprofitable lines. One of the
fastest-growing sectors Is
computer comopnents.
Exports of digital proces-
sors, - the heart of a micro-
computer system, rose 145
per cent during the first two
months of this year and manu-
facturers predict sustained
growth throughout 19S2. Last
year’s total exports in this
sector reached a - modest
HK$27.7nL -
Despite some public com-
mitment by Government's be- .
. half to easing the grovring
pains of companies new to .the -
sector, or those seeking to
. trade up-market; it is doubt-
ful whether electronics manu-^ -
facto cers will ever receive ,
the .kind • of incentives, meted
oat to competitors in places
like Singapore.’ ■
Instead, thef will have to
rely on their . reputation .'for
side-stepping and flair for
.. seeing openings :in .the con-
sumer mat keL :
Meanwhile, manufacturers-,
rely - on - being in the right
place at the right time like
' those companies ;•« who; last
year say a 582 per- cent: rise
in the export value /at , video
games— a market tipped to ex-
; pand, . if at-.a -si ewer, paeej-for
. the next i ew yeare,: .. .
• The big question qow fac-
.ing. Hong • Kong's electronics
companies is whether tiey-
. can - keep ~£be lid on. cost?.
Skillful - management. - of j tnr-
rency markets could also .he a
erfidid" Icatttmu:-; Mo^cod-t
: cexus are s.Uiriinltattirs rather,
than innovator, but thnt could,
change.-..
Japanese open
COMPETITION in the watch-,
making industry is fierce at the
best of times, but when price-
cutting becomes endemic and
-inventories start to pile-up no
;one is prepared to give muefa
quarter.
So is at the moment and
.there is little doubt that watch-
makers, particularly those aim-
ing the cheaper end of the
market, . are • experiencing
troubled times. .
Hong Kong manufacturers,
who since last year have
become the largest suppliers,
in both value and volume
terms, to the vital U.S. market,
are no. exception. Retail prices
have fallen after a sharp reduc-
tion in the cost of components.
Lgst year’s squeeze on profits
sent a number of smaller pro-
ducers to the wall. • •
Bigger concerns, caught in a
-period of over-supply, were •
forced to hu-ild up expensive
WATCHMAKERS
ROBERT COTTRELL
OCTOBER 1982 inmuas
stocks 1o keep ttreir labour at
work. High borrowing costs and
falling dollar revenues., have
merely added to their woes:
. Mr George Block, chairman
of Rem ex Holdings, one of the
colony^ leading Watchmakers;
set the . scene when he said:
“ Eyery market, however small
is-important during a period of
recession." He was referring to
France's surprise decision last
year to impose a severe cut in
imports of Hong Kong-made
watches amid accusations that
its own industry was being
threatened.
France was a relatively small
but expanding market and the
decision, regarded by many in
the* industry as a precursor of
things to come, drew an angry
response. The issue is still
being debated at official
Government level and so far
there is little sign that Paris is
willing to abandon or even tone
down its action.
It is digital LCD (Liquid
crystal display) and LED (light
emitting diode) watches at the
lower end of the market which
have .borne the brunt of a
decline in component values.
"Export, revenue during the first
! two months- this year fell 18-
per cert and watchmakers
expect little or no improvement
for the rest of this year.
By' contrast, demand for
quartz analogue watches —
battery-powered timepieces
with traditional bands and
faces— has surged, more than
compensating for lost earnings
at the'bottom end of tbe quality
-range. Exports in -this sector
showed a healthy 44 per cent
‘rise from January to March,
compared with the same period
last year.
Companies which are able to
do so are plunging into the
manufacture of instrument
panel clocks for cars, a market
that has so far failed to hold
much sway but which the in-
dustry is confident will take off
sooner or later. Export this
year showed an 87 per cent in-
crease over last year. - . .
Part of the problem of over-
supply ha.s been that making.
LCD and LED display watches
is neither capital-intensive nor
really . labour-intensive. A
buoyant market for second-
hand machinery for making up
and stamping wafer-built
displays allowed small assembly
shops to spring up and flood
the market. For a while, they
rose the crest of a wave, then
glut shook the market.
The average selling price of
an LCD watch fell by U.S^IO to
U.S.$28, within the space of
- months resulting in about a 7
per cent • decline in dollar
revenues — despite an increase
last year of more than three
•times that in the volume of
watches actually shipped.
Production of the higher-
priced quartz analogue watches
remains in Japanese hands
because nearly all movements
for these models are imported
from Japan and concerns in
Hong. Kong are under no illu-
sion . that if they, were to
threaten seriously the Japanese
industry a costly scramble for'
market shares could follow.
As with' other, sectors. of in-
dustry. .sharp fluctuations in
exchange rates, during recent
months have been-.? constant
source of concern. Buying'parts
from- Japan in yen and selling,
finished watches to both U.&>
and European markets against
an unstable local currency lias
caused more than a few sleep-
less nights.
In an. effort to counter this,
and the downturn in demand
from traditional areas, watch-
makers have opened up fresh
markets in the Middle East.
Saudi Arabia now ranks third
after the U.S. and West
Germany in terms of total ex-
ports of both watches and
clocks.
Kuwadt; Egypt and Qatar. -
although less important at
present in terms of volume —
exports are siphoned off for
duty-free sales — 1 have ail-
showed growth rates of 100 per
cent or more 90 far this year. ;
Another problem facing the
industry is the shortage of
skilled labour. It seems that
despite a ■ trend . towards
assembly in China’s special
economic zones, where labour
costs are up to 20 per cent less,
arid tbe extra pool created by
tfae shake-out In textiles, watch-
makers are finding it increas-
ingly difficult to attract suitable
workers.
Watch, assembly is repetitive
and unavoidably painstaking. A
watch can contain 'as many as
50 components assembled to
minute ■ tolerances. Most
workers are skilled women who,
for reasons ctf security, prefer
to draw a fiat wage rather than
negotiate piece rates. Many, it
seems, are now leaving their
jobs to spend more time at
home and may return only
after several months’ lay-off.
Japan's leading watchmakers.
V; ; v .
Precision is needed iifi-.the watc hma k mg-' industry
in addition to their bold on the-
supply of components for
quartz analogue models, are
stepping up the- Iqvel of
assembly work tbey carry out
in Hong Kong. Both Seiko and
Citizen, attracted by the ready
flow of competitively-priced
watch cases made in Hong
Kong, have recently opened
assembly plants and sales out-
lets.
Movements are made in either
Japan or Singapore and then
sent to Hong Kong for lie final
stages of assembly. Plans for
expanding have been delayed by
the recession, but it is dear that
both Seiko and Citizen will con-
tinue to play a major part in
Hong Kong's watch industry., *
Such is the paee of techno-
logical development within tbe
industry as a whole that watchr
makers now foresee the day
when mini-computers -will be
small enough to be worn on the
wrist. “ The technology is there;
It is just a question of miniatur-
ising- everything," commented
Mr Block of Rem ex.
Already there are watches
which can record the trtne in
several continents, time a boiled
egg. and wake you up in time to
eat it, wbUe playing a tune
through a .silicon chip.
When the watch with a tiny
computer packed inside it
finally reaches the department
store shelves the chances are
that it will be made in Hong
Kong.
- - " I*.' .
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IfiAPORE^/' Y- :
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'• "* " ~ " ■* > . IV.
Financial Times Monday June 21 1982
HONG KONG XXI
SOCIETY
Basic language proposal runs into controversy
EDUCATION
HILARY STREET
HONG KONG'S education
system reflects the city's
cosmopolitan culture. Both
C . hi nese an d En gifah are used
as teaching languages, while a
■' small group of En gifah schools
offers education on the
English pattern. An American
and German school are avail'
able to children of all
■' nationalities, and French,
Japanese, Portuguese and
Indonesian groups have their
own schools.
■ Almost a quarter of Hong
Kong's population is at
present to be found in the
classroom — 200,000 kinder-
garten pupils, plus Just over
half a million each of primary
and secondary levels.
State schooling has ex-
panded its scope rapidly to
cope with Hong Kong's fast-
growing and youthful popula-
tion. Free compulsory educa-
tion was introduced in all
Government primary schools.
and. most Government-aided
primary schools in 1871.
At secondary level, “Junior"
education — forms one to three
— became free In 1378 and
compulsory in 1979. Beyond
junior level, the Government
expects to provide subsidised
schooling for over half of its
15-year-olds this year.
Th e Hong Kong education
system is being reviewed by a
four-strong panel of experts
appointed in conjunction with
the Organisation of Economic
Co-operation and Develop-
ment While the panel’s
report is due in September,
it has already suggested that
Chinese should be given
greater prominence as a
teaching language among
younger pupils.
Chinese Is the teaching
l anguage of most primary
schools already, whereas most
secondary schools use English,
with supporting tuition in
English as a foreign language.
The argument in favour of
extending the use of Chinese
— in the local Cantonese dia-
lect — 4s that not only may the
children themselves find it
difficult to grasp subjects
taught in English, but their
Chinese teachers too might
Census records
growing wealth
HONG KONG'S particular blend
of individual endeavour and
communal self-discipline con-
tinues to prosper, according to
the results of the 1981 census.
The census — conducted every
ten years— shows a picture of
growing affluence, with real
incomes -rising rapidly, smaller
households and higher edu-
cational- standards among a
recorded population of 5.11m.
Of those b.xtm, 98 per cent
are Chinese, while other ethnic
groups indude 26,000 British,
12.000 Indians and Pakistanis;
and 29,000 people from other
South-East Asian countries.
student fees.
On the housing front, a
perennial problem in over-
crowded Hong Kong, the
Government's continuing cash-
backed commitment 'now means
that 39 per cent of the popula-
tion live in public housing, a
tribute to the importance placed
on the housing programme by
departing governor Sir Murray
MacLehose.
Hong Kong’s reputation for
hard work is reflected in census
labour force statistics. No less
than 70.9 per cent of Hong Kong
people between 15 and 64 are
members of the labour force,
comparing favourably with
Japan (68 per cent) and Singa-
pore (64 per cent), both of
which are also often cited as
shining examples of the work
ethic in action.
Hence, despite the continuing
scar of some 500,000 squatters
in ramshackle huts sold to them
by sharp-minded racketeers,
more people now enjoy the
luxury of a home of their own.
Aspirations towards ownership
are being catered for by the
Government's subsidised home
ownership scheme.
Again reflecting the housing |
programme. Hong Kong's I
population is spreading geo- i
graphically. The number of 1
Hong Kong differs from its
regional neighbours in having
no centralised coercion to work,
contrasting with the institu-
tionalisation of the work ethic
into the Japanese corporate
system with its tradition of life-
time employment and Singa-
pore's Lee Kwan Yu. alarmed
by the by-products of Western
affluence, is urging his people
too to follow the Japanese
modeL'
The Hong Kong folk-heroes
are the rags-to-riches men. self-
starters who provide the
example to inspire others. The
emphasis is on the individual
and the family, with the Gov-
ernment having a contingent
rather than a guiding role in
the creation of wealth.
As to that creation of wealth,
real per household incomes in
Hong Kong rose by 85 per cent
between 1971 and 1981, an
average yearly rise of 6,3 per
cent, despite the need to find
850,000 new jobs for fresh
immigrants from China.
Educationally, standards im-
proved, too with primary educa-
tion plus three years of
secondary education now free
and compulsory, 42 per cent of
the 1981 population bad
secondary education against
28.5 per cent in 1971. For the
16 to 17 age group, Hong Kong
now has -61 per cent in full-time
education compared with 46 per
cent in Britain. The trend con-
tinues through the 18 to 20 age
group, where Hong Kong's 23
per cent compares with Britain's
16 per cent
POPULATION
CHRISTOPHER WOOD
people living in the New Terri-
tories has doubled over the last
10 years to 1.3m. As the New
Towns grow up, the question
remains as to whether their
populations, often displaced
from urban areas, will adjust
to their new environments or
whether the vast new estates,
some housing 60.000 people, will
become a breeding ground far
alienation. So far, however, the
picture from the estates has
been a positive one. with few
law-and-order problems.
A key factor in making the
New Towns work is transport I
rivalling housing now as Hong I
Kong's number one problem.
Getting to work can take, an
hour and more. The mass
transit railway and the ;
Kowlo on-Canton Railway are i
helping to make commuting
more tolerable. But despite the
general recognition that Hong
Kong’s roads are critically
crowded, a recent Government
move to triple car taxes pro-
voked heated public debate. Six
members of the Legislative
Council went so far as to put
away their rubber stamps and
vote against it
These figures represent not
only the impact of Hong Kong
Government ■ptFOgrammes but
also the importance placed by
Hong Kong people on educa-
tional standards. The pressures
on children can become unbear-
able, particularly in the exam
season which each year
generates its student suicides.
A bottleneck exists at the
tertiary level, where Hong
Kong's two universities and one
polytechnic cannot meet the
aspirations of local career-
minded young people. Hence
only 2,7 per cent of Hong Kong's
population has received a uni-
versity education, half the pro-
portion for Singapore. In these
circumstances, those who can-
not make the grade look abroad
— a practical necessity contri-
buting to the dismay caused by
the British Government's in-
sensitive policy on overseas
Such dissent is peripheral
and manageable. The vast
majority of the people support
the system and its values, even
if they cannot articulate that
support. After all, many of
them voted with their feet by
coming to Hong Kong.
Yet the past year has seen
admittedly isolated civil dis-
turbance, with a mob of youths
rampaging through Central
District in the early hours of
Christmas morning. Their tar-
gets were the smart shops
selling European de luxe goods
to rich customers.
WHERE THEY LIVE
By area: 1981 •
Number
of persons %
Hong Kong Island 1483,631 23.7
Kowloon 799,123 16.0
New Kowloon ... 1,651,064 334
New Territories 3403,005 264
yfarinp 49,747 L0
Total 4488460100.0
An indication, perhaps, that
today’s Chinese youth will be
more demanding than its
parents' generation? Increas-
ingly self-confident and out-
spoken, Hong Kong to the young
is a home rather than a refuge,
and increasingly they will want
some say in its future.
They have, after all. no
guaranteed future in Britain.
Last year's UK Nationality Act <
hammered home the second-
class status of the citizens of
Britain's dependent territories.
It was widely resented in Hong
Kong, as was Gibraltar’s speci-
ally preferential treatment
One final note from the 1981
census— Hong Kong is getting
older. But there is no danger
yet of a hardening* of the
arteries. The average age of
the population went up by five
years between 3971 and 1981—
from just 21 to 26.
often lack fluency in the lan-
guage, however fluent their
grasp of their own subject.
On the other hand, English
is the lingua franca of busi-
ness. One has to look no
further than the classified job
advertisements in local papers
to discover that English is
essential to Chinese young-
sters looking, for a good-
career.
Where pupils, and their
parents, have a chance to vote
with their feet at tertiary
level, they choose English as
the language of learning:
Hong Kong has two unfver-
sltes, one English and one
Chinese. Competition for
places at the English univer-
sity is far more fierce, and at
a secondary level, the
minority of students holding
examination certificates won
in Cantonese ' will find
potential employers viewing
them less favourably titan
certificates won in English.
Tbe language issue is the
most pressing question facing
educationalists in Hong Kong
at the moment, and it remains
to be seen how persuasive the
OECD experts’ report proves
to be at the primary level.
But at the secondary level,
too, there are factors which
might make an expatriate
English teacher wonder more
than a little. Many class-
rooms have a near-Victorian .
atmosphere of rote-learning,
no discussion, little creative
writing and rigorously
prescriptive syllabus.
Sometimes . an obscure
syllabus, too. What do Chinese
is-year-olds make of
Bismarck’s foreign policy, or
of Henry VHTs marital
difficulties? But the style of
teaching is evoked by this
extract from the staff regula-
tions on one secondary school,
" Teachers should always
teach in standing position.
Blackboard writing must be
neat and orderly and: should
always be begun from top to
bottom. Teachers must closely
follow the syllabus set out by
the school for every subject.
Teachers should always
appear In attire befitting a
teacher and avoid all gaudy
outfits."
Teachers may also, for good
measure, in many cases have
to keep their cool in non-
ai [-conditioned classrooms
thick with tropical humidity
while addressing classes of 45
or more with the aid of a
public address system to reach
pupils at the back.
But carping ar tbe limita-
tions of Hong Kong’s edu-
cation system should not
obscure recognition of tbe
problems with which It has
to deal. A quarter of the five
million-strong population is
under 15. All of Hong Kong’s
public services have had to
cope with waves of unplanned
immigration, and education is
budgeted this year to absorb
HKSiAbn, or almost 15 per
cent of total expenditure.
In sharp contrast to
Britain, the demand and
respect for education among
young and old people in
Hong Kong Is seemingly
inexhaustible. The exam
months of May and' June find
teenagers everywhere des-
perately searching for auiet
places to study away from
their crowded flats with no
chance of privacy— tbe eager
learners can be found then in
the air-conditioned lounge of
Kaitak airport, or in door-
ways at the back of City Hall.
.-Sy s v
WHERE THEY GO
1971 1981
% %
No schooling/kinder-
garten 2L0 15.5
Primary 53-0 39.8
Secondary / matricu-
lation 22.9 39.2
Post-secondary / uni-
versity 3.1 5.5
Total 100.0 100.0
In Britain, poverty, over-
crowding and the pressures of
Inner city living are
frequently given as reasons
for the failure of both pupils
and tho education system. In
Hong Kong, the reverse
attitude prevails. It is
especially among the squat-
ters of Kwun Tong and other
shack-dwellers that education
is most to be cherished, as a
passport to a standard of
living.
The author 'is a teacher in
Hong Kong. '
.... V
fsjiVJ* ;> v v.
With a quarter of Song Kong's five million population under 15, the demand for
jobs for youngsters is high. Above: girls assembling computer printed boards
at the Ampex Ferrotec factory
.-ll. al.’#-.-
: 4- -
We have had a well-established reputation in the Far East for many years and now
our green and white tail has appeared in Europe.
Our daily one-stop flights between London and Hong Kong cany passengers
not only from theUK but from all countries inEurOpe.
And with the arrival of our new 747 freighter, wd now have an all -cargo .
scheduledsemce mice a week from London and-4 times a weekfrom
Frankfurt?
$
£
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Ca t hay Pacific — you can depend on us*
1 *ln conjunction with Lufthansa.
AgDBM-MHKAW-SBaagg-BOMW-MM-lXTMr.i ^f T ^ i .^y.rfr^ .imr. . . . ,
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'XXII
HONG KONG XXH
FinaltCUl Tim** ,U "' 21 I ® B _
GOVERNMENT
How the new Financial Secretary and Chief Secretary see their respective roles in the administration
PROFILE: JOHN BREMRIDGE
Learning the rules
When John Bremridge
was appointed to the post of
Hong Kong’s Financial Secre-
tary last year many pundits
predicted that he would be
confused In his new world.
After all. they argued, it was
a big jump from being Taipan
(or Hong Kong chief) or the
house of Swire to be Finan-
cial Secretary: from the free-
wheeling. and even free boot-
ing. some said, private sector
into the- world of bureaucracy
and red tape.
He has not found it too
big a change. " I have never
believed that the private sec-
tor's only duty is to maximise
profits,” Mr Bremridge
declared. ** Certainly at
Swires we never operated
according to such cut and
dried criterion.
“At senior levels in business,
assuming that you are an
employee and not running
your own company, like Li
Ka-Shing. chairman of Cheung
Kong, you tend to be a
senior administrator, and I
don’t think that a senior ad-
ministrator should be out of
place in industry or In
government or in academic
life."
Yet he concedes that there
are differences and that the
newcomer from the private
to the public sector can find
himself in a maze. "The prob-
lem of course is that you
don’t know all the fanny
little ground rules, like the
leave terms, the housing
terms. There is much more of
a system to play in the civil
service than in the private
sector.” ’
Probably only in Hong
Kong — or the U.S. — would a
topflight businessman con-
sider or be considered for a
move to the main government
financial joh.There can bardiy
be a bigger contrast than
between Mr Bremridge and'
his predecessor. Sir 'Philip
Haddon-Cave (now Chief
Secretary).
Sir Philip is almost the
archetypal senior bureaucrat:
clever, with the almost grey
bearing of a mandarin allevi-
ated by a dry sense of
humour. Sir Philip would
grace any Treasury top floor.
“Sir Philip is also a very
great academic economist,'’
adds his successor.
Whereas the previous
Financial Secretary always
seemed self-contained Mr
Bremridge looks instantly
ready to burst out. He is
known for his eoiourful turn
of phrase. He Is reported to
have said of one of the well-
known figures of Hong Kong:
“I am . never sure about
shaking hands with him as (
don’t know what he has bees
doing. He re min ds me of an
undertaker with his grave
manner — I’m sorry, I mean
an embalmer.”
His ordinary conversation
is splattered with robust ex-
pletives. which is something
of a surprise because in many
aspects Mr Bremridge is a
man of puritanical rectitude.
The Financial Secretary
says that in one Important
respect a basic rule of
behaviour has not changed.
“When T was at Swire a guide
to my decision-making was
how would I react If that deci-
sion was leaked to the Press:
would I be embarrassed or
not As long as my conscience
is clear and I would not be
embarrassed, 1 can sleep
well.”
Mr Bremridge concedes that
“I have a reputation for an
inability to suffer fools.”
Besides the piles of official
papers his desk is deeorated
with a small mem ento bear-
thc slogan “THINK.” It is
turned towards the visitor
not towards Mr Bremridge.
The new’ Financial Secre-
tary went out to Hong Rong
with the Swire Group without
having really sat down and
planned it. Having served in
the Rifle Brigade in the
Middle Fast after the war. be
read law at St John's College,
Oxford. “I would have liked
to have become a barrister,
bnt did not have the money.
“In those days of the Berlin
airlift. It did not look as if
it wonld he long before we
were at war again. So I went
to the Appointments Board
looking for a Job which would
allow me to travel. I looked
at shipping companies because
shipping would get me
abroad." Swire offered him a
job and it was first stop to
becoming Taipan as a junior
working for Blue Funnel in
Hong Kong.
That was 30 years and Mr
Bremridge has come to have
confidence in Hong Kong. The
trouble is that not all of its
destiny is in his bands nor
even of the people of the
territory. He points out:
“With, such a high depen-
dence on trade Hong Kong is
vulnerable If people abroad
can't buy our goods because
they don't have the money or
if hypocritical governments
bring in regulations prevent-
ing them from buying. '
H e says that the political
facts of life are that “there
are a lot of crooked politicians
who are intent on screwing
small countries uke Hong
Kong and Korea so that they
can get themselves re-elected.”
As such, they do not respond
to intelligence, logic, decency
or argument. The solntion for
Hong Kong, like a small hoy
in the face of a bully, is to
stay out of the way — but
that is not always easy.
Within Hong Kong, too, the
Financial Secretary has to live
PROFILE: SIR PHILIP HADDON-CAVE
John Bremridge: a move from the private to the
public sector •
with the repercussions of
policies which have allowed
property owners to emerge as
the new big barons of the
colony. Friends say that Mr
Bremridge would like to see
the more unscrupulous pro-
perty dealers get a taste of
their own medicine, but he is
constrained by the fragile
nature of Hong Kong's
property edifice.
One collapse could lead to
a panic reaction, and damage
the banks which fund the pro-
perty companies. In addition,
the government budget sur-
plus is built on a healthy
property market because of
revenue from land sales.
The ' Financial Secretary
has, however, been prepared
to see substantial falls in land
prices. Some land has been
withdrawn from sale for
failing to meet the reserve
price, hut Mr Bremridge
smiles tolerantly and says
that he cannot allow bargain
basement prices which would
allow dealers to make an
instant killing.
The other major worrying
factor is the rapfd expansion
of banks and deposit-taking
companies, many of which
have helped to fuel the pro-
perty boom. Mr Bremridge
says that part of his job is “ to
persuade bankers to behave
like hankers, and not like
bloody pawnbrokers. "
Not everyone, even within
the bureaucracy, is an
admirer' of Mr Bremridge or
bis way of doing things. His
predecessor had done the job
for 10 years and was an
economist so that he could
keep a close eye on things and
discuss the finer details of
money supply. Mr Brem-
ridge of necessity has to take
a broader view and to delegate
more.
Critics say that he ts oat ot
his depth and is blundering
around. Bt they may foil to
take account of the fact that
Hong Kong no longer, faces
such an equable or equitable
world climate. In a society
like Hong Kong, the Financial
Secretary has no magic strings
to pull to put things right,
nor would he want to try.
One of the World’s
Great Hotel Companies
The activities of The Hongkong and.
Shanghai Hotels, Ltd. encompass
property, hotel and catering
interests.
Management skills on the property
side are directed towards the
development of company properties
and the letting of top quality shop,
office and apartment space to a
wide variety of tenants.
Under the marketing banner “The
Peninsula Group” the Company
operates the world famous super
deluxe Peninsula Hotel, as well as
five other first class hotels in South.
East Asia. In addition agreement
has been reached to operate three
further hotels that are currently
under construction.
The Company also operates restau-
rants and food and beverage whole-,
sale and retail outlets, as well" as
providing laundry, airline catering
and other tourist related services.
The Peninsula Group
Hotels in Hong Kong: The Peninsula, The Hongkong Hotel, The Marco Polo Hong Kong and
The Discovery Bay Hotel ^opening 1984)
In Singapore: The Marco Polo
In Beijing: The Jianguo Hotel
In the Philippine The Manila Peninsula
In Thailand: The Bangkok Peninsula (opening late 1982)
THE HONGKONG AND SHANGHAI HOTELS, LTD.
Incorporating The Peninsula Group
Property • Hotel Ownership and Management • Catering
Ilth Floor, St, George’s Building, Central. Hong Kong.
Tel: 5-249391 Telex: 74509 KREM HX
Positive
stance on
passivity
Sir Philip Haddon-Cave was
appointed Chief Secretary of
Bong Kong last year in succes-
sion to Sir -Jack Cater. For-
merly' Financial. Secretary for
ten years, .Sir . Philip is the
architect of the economic policy
which he came to. -call positive
non-intervehtiomsm,” as distinct,
from the laissez-faire ” tag
often loosely applied to Bong
Kong.
Laissez-faire^ said Sir Philip,
implied a misleading passivity
on the part: '-ot, government,
which in fact, bad a valuable
supporting role to play. As
Chief Secretary. Sir Philip is
deputy to the Governor, and
head of the civil service. He
was born in Tasmania and was
educated at university there and
at King's College, Cambridge.
After two years as an economics
lecturer at Melbourne Univer-
sity, he joined the colonial
service in 1951 .and served in
Kenya and the Seychelles before
joining the Hong Kong Govern-
ment in 1962.
Sir Philip' Haddon-Cave, deputy to the Governor
The l£wai Chong container terminal is hard-pressed for space and
the airport at Kaitak may be sketched by the end of the decade
Pressure on two fronts
HONG KONG’S Kwai Chung
container terminal, on the
northwest edge of Kowloon, is
the third largest container port
in the world, surpassed only by
New York and Rotterdam. Like
all commercial operations in
Hong Kong, it is strapped for
space in which to manoeuvre.
Container operators continue to
pressure the Government to
authorise reclamation of lajid
for more berths.
However, despite predictions
that Kwai Chung was approach-
ing critical over-crowding, it has
continued to operate relatively
smoothly. An important con-
tributory reason is the slowdown
in domestic exports growth from
Hong Kong this year. While the
Government’s February Budget
forecast was for 7 per cent real
growth, operators at Kwai
Chung are slicing two to three
points off that in their own
estimations.
Another factor is the chang-
ing nature of Hong Kong's
exports. As industry diversifies
to find its growth outside the
traditional textile and garment
sector, electronics, electrical
and specialised engineering
goods make up a growing pro-
portion of exports, and demand
proportionately less shipping
space.
None the less, when demand
particularly in the important
tLS. market picks up. so will
the pressure on Kwai Chung
and the need for operators to
streamline operations still
further.
As an example of just how
pressured Kwai Chung already
Is. take the case of one of its
major operators. Modern Termi-
nals Limited (MTL), which last
year wanted to fit two large con-
tainer cranes on to its berths
to facilitate loading. MTL found
it more cost-effective fo have
the two units constructed at a
factory in Japan and then .
towed by sea in their completed
state to Kwai Chung. MTL
reckoned that it could not afford
the down-time needed on its
container h andling berth to con-
struct the cranes, on-site.
Seal and, another operator,
has gone into partnership with
local group Far East consor-
tium to build a multi-storey,
container station on its site to'
maximise usage of the available
ground-space. As to proriding
the additional space which
Kwai Chung as a whole will
one day need, operators
entered joint talks with the
Government last year on the
reclamation of 23 hectares of
land near the existing numbers
three and four berths. Talks
on these and other plans con-
tinue.
PORT AND AIRPORT
reTBR GILL
The aspect of Kwai Chung's
business most vulnerable to
crowding-out is transhipment
cargoes. ' At present tran-
shipment volumes account for
almost half the containers
handled through Hong Kong.
But this ..traffic could be
reduced drastically if conges-
tion made it in practice easier
for another ship to call else-
where rather than tranship at
Hong Kong.
This potential problem is
compounded by moves by
countries , in the South-east
Asian region to . boost the
market shares of their national
carriers. The Philippines and
Indonesia . are examples of
countries which have moved
locally, to protect their own
national lines. •
— In port facilities, as 'in every
other aspect of its everyday
life, Hong Kong must weigh
China heavily in its balance of
thinking. Shipping companies
believe that the Chinese will
' have to use Hong Kong's
facilities for container traffic
in the foreseeable future. China
has few deep water ports «f
its own. Even Shanghai, per-
haps the key centre for future
Chinese container traffic, can
take ships only of up to 28-foot
draught.
Undoubtedly, China will liavc
to spend money beefing up its
handling capacity and develop-
ing its own harbours. But a
choice must be made between
bulk commodity handling
facilities and container traffic.
Given the needs of the
moment, particularly for grain,
available Chinese money is far
more likely to be spent bn bulk
handling facilities. This, would
leave Kwai Chung with the
long-term responsibility* for
moving China’s large con-
tainer cargoes. such as
textiles and foodstuffs.
In summary, then. Hong
Kong’s container facilities will
need long-term expansion, but it
may be a longer-term than might
have earlier been anticipated. 7t
may be confidently expected that
the Government will be keeping
a close eye on Kwai Chung's
problems. The economic conse-
quences of clogging up Hong
Kong’s most important export
outlet would be severe; While
Kwai Chung’s potential for
bottlenecking is keenly per-
ceived.
The. Government is taking a
cooler view of ' the need to
replace its existing airport at
Kaitak. Arrivals and departures
at Kaitak have increased by io
per cent over the last six years,
reaching a total last year of
55^93m. Passenger handling
capacity may be reached by the
end of the decade.
The increase is a tribute, to
Kaitak’s flight controllers, since
CONTINUED ON NEXT PAGE
PROFILE: JAYSON MUGAR
an east- west blend
JAYSON. MUGAR of the
Chartered Bank sees business
with' China as being a bit like a
game of snakes and ladders.
Experienced bankers know
how to get round the snakes and
look for the ladders," he says.
Mr Mugar is guardedly opti-
mistic about prospects for the
growth ’ of western banks'
business with China based. on.
what he describes as the return
of the rule of law and financial
disciplines.
r They’re systematic now
which is important," he says.
“ Where it breaks down is
when it gets down into cells
and sub-cells. Lower level
officials don’t hSve the vigour to
charge ahead . . . bankers find
that when we get outside the
mainstream, there is a rigidity
in thinking ."
Mr - Mugar heads the
Chartered Bank’s China section
whose job it \ is ' to monitor
business developments in China
and identify areas of promise.
With' Chinese economic priori-
ties in a state -of flux most of
the time this is not an easy task.
‘This whole business for
bankers is a very sophisticated. .
specialised, art,” he says. “ You
can constantly do this business
and not get anywhere. The pre-
mium on personal relationships
is more evident than in any
other market.’’ . -
,Mr Mugar says that bankers
dealing with- China face two.
main. problems: one- is how to.
develop a. relationship of trust
with Chinese officials, and the
other is knowing how id iden-
Jayson Mugar: Western
disciplines with Chinese
methodologies
tify ■ opportunities in a con-
stantly, changing market.
. "As far as bankers are con-
cerned dealing with this en-
vironment, opportunities are 1 ,
there” he says. ” It's just a
question of how you structure
them. . . . .... .. . ...
“Tm a great . advocate, of
structuring business .deals that
blend. Western disciplines . with
'Chinese methodologies. You can-
not impose classical- forms, of
banking on (he Chinese. Nor
can you take -the Chinese' ver-
sion and impose it on Western
systems. Ifs just not a fit, so
• you have t<r build hybri
models.”-. .
Mr Mugar- instances compe
satioo trade and co-profluctic
agreements as . an example, <
what he is talking about. Tty*
are schemes whereby the'f qrei^
• partner supplies eiflu
machinery' o’r raw materials t
both in return for the; finish e
product, which is exported. -
Some big western banks she
,-as- Chase. 'Manhattan^ and.'Cit
bank are now setting -tip sp&u
. counter-trade . department
according to Mr Mugar, i- i
handle this sort of business, an
some banks are even becomin
principals in trading finishe
products.
The Chartered Bank has y«
to set up its own counter-trad
department, but Mr Musa
hints that it is moving in tH-
direction. He say s that bank
ro ci?£ a g0mg * be succes sfi
lD £^i na roust be “ innovative
must have a good China seciio
and must have an ability to i r
troduce clients to China ”
***• Acuities bankei
.and businessmen encounter J
dealing with China are- DI J
^ ? bureaucrati c inertia 3 5
difficulty of actually
ChiniSe Kaumcy who ^
be Patiently pointed out a ?ha
this is not the case. 1 tIia
J ' ' *■
: .:;v
j. . .
»■ "»■ V" 1
•*U ».«, ..
•- 2' , •
M!j * .
iNIUk Fbia . n ? ial Tim es Monday June 21 19S2
M \ HONG KONG XXIII
J •
XXIII
Year.
1977
1978
1979
1980
1981
TOURISM
Incoming visitors
Japan UJS. Taiwan Australia Others Total
485.495 254.186 87,488 154,849 771651 1 755 G69
487,250 284,642 128,924 160.004 991919 *054.tS
508,011 303,583 206,344 139,236 1,056 035 UU«2
472.182 346J10 123,644 166J70 1 2,30M7?
a07J60 372.133 135,621 201.793 1.31 7,696 £s3S%ol
T/ic’ American /asi-/ood revolution haa caught up
with the Chinese in Hong Kong. Below: street
signs with a London flavour ■
January ..
February
March .....
April
May
June
July
August ...
September
October ...
November
December
CLIMATE
Mean Mean relative
temperature humidity
° c %
16.3 67
17.6 80
20.6 82
24-2 84
25.2 81
26.9 80
28.4 80
29.1 79
27.2 81
24J? 76
■ 20.3 74
16.4 60
Total
rainfall
ram
‘Trace
11.8
123.9
94.2
336.1
106.4
317.2
X01.2
381.9
111.6
69.8
5.4
L a ev*
^npeth
Colourful stalls and the fish market
Walk
1
How to get about, where to eat and how to dress
d for
“of the dtqj
fronti
BASIC GEOGRAPHY: Urban
Hong Kong divides into two
sections — Hong Kong Island
itself, and Kowloon across
the harbour on the mainland.
The distinction is abbreviated
conversationally to “ Hong
Kong side” and “Kowloon
side. On the north shore of
Hong Kong Island are the
main business districts,
Central, and the nightclub
district of Wancbai.
The big tourist hotels and
shopping centres are on the
southern tip of Kowloon, in
the district called Tsim Sha
Tsui, pronounced “Sim Shah
Choy.” On the south side of
Hang Kong Island are the
resort towns of Stanley and
Repulse Bay. North of
Kowloon on the mainland are
. the New • Territories, once
agricultural now developed
for industrial and new town
reside ntial use.
GETTING ABOUT: Hong
Kong's airport is located at
Kaitak on Kowloon side... A :
taxi- from Kaitak to Central
district will cost around
HK$35. including a HK$1Q .
supplement for using the.
cross-harbour road !' tunnel
whit* . connects the Island j
. with- Kowloon. . ,$he. .qiajor -
hotels' also .offer . their, own
limousine services . from •
-Kaitak.; '
Hong Kong’s- ced-and*ilver
By Robert Cottrell
[Businessman?
gkjiuide
metred taxis are cheap,
honest and generally the best
bet for local travel. Many
drivers speak limited English,
though, so if you have an off-
. the-beaten track destination
try to get it written out in
Chinese characters first. Be
prepared, also for widespread
; traffic congestion, and a
shortage of taxis at peak
times, particularly lunchtime
in Central. The. best place to
find them then is at the big
hotel ranks.
For. the short hop between the
Central, district' and Tsim Sha
Tsui, use the frequent Star
ferry service or try the fast
.. aad. clean MTR underground
. railway,, yhich . connects
Central with Tsim Sha Tsui,
and then branches into two
lines running further into
Kowloon.
HOTELS: For Central district.
Jbe best hotels are the
Mandarin — still the most
prestigious hotel in Hong
Kong — and the Hilton. Both
are located in the heart of
• Central. On Kowloon side
are ihe stately Peninsula
Hotel, and the plush new
Regent Sadly, the Repulse
Bay Hotel, long favoured by
those seeking a quieter loca- '
tion on Hong Kong Island, is
now set for demolition.
Mandarin Hotel, teL 5-224466
(reservations). Hilton Hotel. «
lei. 5-233111. Peninsula Hotel,
tel. 3-66625J. Regent Hotel
tel. 3-7211211.
RESTAURANTS: For business
entertaining in Central dis-
trict, both the Mandarin and
the Hilton have grill rooms
offering good food and
prompt service. Two other
good restaurants in Central
are the famous Jimmy’s
Kitchen. South China Build-
ing, Wyndham Street (tel.
5-265293). Book at least a
day ahead,, and the Mari-
nushka, a pleasant Mediter-
ranean restaurant—though
avoid the less smart upstairs
-nat 6,' on Lan Street, tel.
5-240165.
For recreational eating, tTy the
Codown restaurant in Suther-
land House, Central District,
which has jazz and .dance
music in the evenings, tel.
5-221608. Or for a magnificent
view of Hong Kong over the
harbour, with pricey French
food and fussy service, the
Plume. Restaurants men-
tioned so far specialise in
Western food.
H °n« Kong also offers some of
the best and most varied
Chinese food in the world—
not. just the Cantonese
cuisine found in most
Western Chinese restaurants,
hut also Shanghainese,
Pekinese. Fukkienese.
Sichuan. Chiu Chow and
other regional cuisines. As a
general rule, most Chinese
Restaurants in Hong Kong
offer good food and value-for-
money.
If you don't have time to search
around, plunge straight in
the nearest and allow vour-
self to be guided by* the
waiter. Not too much
guidance, however, or you
are liable to end up with
sweet-and-sour pork, chop
suey and other run-of-the-
mill dishes which the Chinese
assume Western palates will
favour.. Go in a group, and
share dishes between you
mixing meat, fish, vegetables
and noodles or rice,
Cantonese food is light mild,
Sischuan food heavier and
spicy. Cantonese food will
usually be supported with
nee, where Northern cuisines
— Shanghainese, Pekinese,
will favour breads and
noodles.
For a gentle introduction to
regional Chinese food in
Central district, try the
Peking Garden in Alexandra
House, telephone 5-266456:
and the Sichuan Garden in
Gloucester Tower. Landmark
Centre, telephone 5-214433.
Both are spacious and com-
fortable. with bookable
private rooms and helpful
English-speaking service.
BUSINESS PROTOCOL: A
large supply of business
cards is a must — they will
be exchanged with almost
Japanese fervour. Despite
the tropical climate, air-
conditioned offices mean
business dress remains
formal — grey pinstripes are
• better than safari suits, even
when humidity stands at 95
per cent. The business day
is long — S.30 to 6 for raanv
executives — and Saturday
morning working is normal.
RECREATION : Hong Kong's
most popular relaxation is
messing about on boats, be
they junks, yachts or wind-
surfers. Yellow pages or
your hotel, reception is the
place to turn for advice on
hiring boats, but better still
get yourself invited out on ;
somebody else's. Horse-
racing at Shatin and Happy
Valley is another popular
recreation, except in the out-
of-season high summer 1
months. The Royal Hong [
Kong Jockey Club offers
tourist memberships, but
only on production of a pass-
port showing an entry visa
less than two weeks old.
IT" ' T
Pressure on two fronts
CONTINUED FROM PREVIOUS PAGE
the airport has just one runway,
extending 11,000 feet on re-
' claimed land out into the sea off
Kowloon. But The cost of
replacing Kaitak would be for-
midable. A basic estimate' of
- perhaps HK$7bn could be
increased several times depend-
ing on how many of .the support
facilities were counted in as the
cost of the airport itself. .
.Suggestions have been made
for a mw. airport, studies tarried
out and sites pinpointed. Out
of some 13 original putative
locations, the most likely now
looks to be Shep Lap Kok on
the north side of Lanfau Island.
The ; site is about 20km from
Central district, and is as it now
stands a rather sleepy " island
linked . by ' feny from Hong
Kong.
Just building a couple of run-
ways at Shep Lap Kok would do
little to help Hong Kong's air
communications. Not only would
on-site support facilities be
required, but also fast direct
access to Kowloon. •
The best way of providing
that access is reckoned to be
a bridge across the bay from
Lantau, linked to a- network of
new feeder roads In West
Kowloon. Included in other
supporting engineering work
whh* would be called for to
develop Sbep Lap Kok, would
be a large programme of land
reclamation.
Given the cost and difficulties
of the best alternative, perhaps
a mere extension of Kaiuu:
might be tried but Kaitak -is in
the heart of urban Hong Kong,
and noisy dangerous aeroplanes
are not generally to be encour-
aged in dty centres. Moreover,
Kaitak would provide valuable
central real estate if It could
be freed for development
The Chinese consideration
for Hong Kong’s airport
planners is the possibility of
an airport over the border in
the special economic zone of
Shenzhen. ‘Rie tourist industry,
however, seems to enjoy using
Hong Kong as its stepping-stone
into China, and the Chinese
themselves encourage this
scheme with some of their cwn
tour plans.
'lend
!**•»*,% *,
:•-» <
A '■/*
.. . .,
> : *
• •*£
' — . j'u
lityW
i:':/- 7 -' v ' " ■ - 7 "
Air traffic control at the international Kaitak airport. Below: the P & 0
liner Arcadia at the Ocean Terminal, Kowloon
Life oriental style
. Courtesyand elegance. Welcome to the Hong Kong Hilton. A superbly convenient hotel in.
tliejslands central distrin.Magniiicent decon Bedrooms with beautiih I Burma teak. Colourtele-
Ytsions._Snacks from the fudge. Fantastic views. Swimming before breakfast. Good morning Our
tantalising shopping centre. Dinner on our brigantine around Hong Kon? harbout Aworifout fti
Hong Eong
_TOTwnriArtJercsenudons contact yourujrcl a^ent, any HU ton hotel orthe
Hutan Reservation SertkeOffiecsin Cope nh ja cn. fiianldiut.iondm^ MartnM anri y at*. '
ADSY OF LIEE
Financial Times Monday June 21 1982
i
HONG KONGS LEADING
PROPERTY DEVELOPMENT AM)
INVESTMENT HOLDING GROUP
HIGHLIGHTS for the Year Ended 31st December, 1981
• Net profits after tax excluding Extraordiriaries total HK$1 / 385.4 million: up 97%, representing
a 38% return on average shareholders funds outstanding during the year.
• Shareholders funds at the end of the year amounted to HK$4, 417.1 million (Book Value).
• Total profits after tax including Extraordinaries total HK$1 ,604.5 million.
• Final dividend 48 cents, making 70 cents total for the year: up 44% after allowing for 3
for 10 bonus issue in May 1981. ■
• Improved recurrent earnings from associated public companies:
' - Hutchison Whampoa' Limited (over 40% owned) up 92% to HK$79Q million excluding
Extraordinaries of $157 million.
- Green Island Cement Company, Limited (over 40% held through 70% owned subsidiary)
up 15.9% to HK$93.7 million.
• Lee Hing Development Limited . (over 40% owned) announced unaudited interim profits for
6 months ended 31st December 1981- of; HK$29:3. million excluding Extraordinaries of
HK$224.9 million.
-« New public company floated in May 1981, International City Holdings Limited (over 30%
owned), announced profits for 7 months operations in 1981 of HK$147 million.
• 10 major projects completed during 1981.
• 18 projects scheduled foe completion during 1982.
• 1982 will be a difficult but challenging year, and total dividends are forecast to be hot
less than the 70 cents per share paid for 1981.
FOR ALL INVESTMENT PROPOSALS, ALL SALES. AND LETTING ENQUIRIES, ANQ FOR
FURTHER INFORMATION PLEASE CONTACT:
Mr. George C. Magnus Or Mr. George C. Zang,
1 ^ Executive Directors
CHEUNG KONG (HOLDINGS) UNITED
2Tst FtW/,:China Building,. 29 Queen's Road Central, Hong Kong
Telephone: 5-266911; .(30 lines). .Telex: 86209
GROUP PifflFITftFnR TAK
KKS1,385Millian
HKS701Million
• *
- ? .* #' » * t . •* r "» f 2 »" *- ;• ■ * ■ • / 'T': - ’**? *. ' ; 7 *,^ / * ~
’/ 'V • ■ '/'* V* ' V"-* ? -V ‘VV* " •* : " * 1
. Financial Times Monday jiuw 21 1982
PERSONAL COMPUTERS
new
Lombard
PoHce and the
/
By Jason Crisp in London and Louise Kehoe in California
mmm.
LESS THAN five years ago per-' fgg&Mrys
sonal computers were generally “raSs.
seen as little more than an ii
foresting. but Irrelevant diver-
sion. Today they have turned
into an extraordinary business
worth around $11 bn worldwide
with annual growth rates be-
tween 50 and 100 per cent. By
the end of the decade the world
market is expected to exceed
$50bn.
T7ie. marketplace is beginning
to resemble the Klondike.
Dozens of new companies are -
being formed hoping to strike
gold like Apple — now a $500m-
a-year business started in a
California garage in 1076. The
business is now so fiercely com-
petitive that no ..established
manufacturer of computers or
office equipment can risk ignor-
ing iL
- In the last nine months a
host of major companies have
entered the field including IBM.
Digital • Equipment, ICL,
Olivetti, Wang, Sysiime, S.ony
Hanov^ 7 Trade A p^ e There IBBTs Personal Computer: one of the biggest selling micros in the U.S.
were over 100 different personal •
computers on show from nearly ^“her of personal computers, than adequate for use at home. dore. Tandy’s $200 “ Colour
60 manufacturers. Amd- a flood Il> or one of rhe 20 or more Most of the machines that computer” is available through
of new products is promised be- J o<*-aIikes that have been writ- have been sold, both for busi- Radio Shack, its nationwide
IBM’s Personal Computer: one of the biggest selling micros in the U.S.
fore the end of the year.
ten, is essential for any new ness and home use, are 8-bit consumer electronics stores —
The first brief years of per- P 61 ^ 011 * 1 computer if it is to computers. But the majority of by far the most extensive of
■ - succeed. - - - —
sonal' computers have been
dominated by three U.S. com-
the recently launched products any U.S. manufacturer.
Indeed the computer soft- including those from DEC. IBM.
panies - Apple, Commodore other "f** whal Olivetti, Hitachi and Nippon pu ^ are Slv for
and Tandy (Radio Shack). — someo ° e usefully do on a Electrie-and the small but £££1? Pl?e-i?rideo a mt url
none of which was part of the 2V****" become of ^gh-flying U.S. companies like S^'are popular buMhe c?^
established compute? industrv: ft? key faaors in the market. Sirius, Fortune, Convergent also hS a kevboard Ind
The entry into the marker of ■’SSSPEL”* Altow-are all ££ r proems whScnableil-
C «P* >U * er . m *Jors together , a „ { T, prsDna i ^PP^ e *? ° ne of the few t0 t> e used f Qr word-processing,
frith office equipment companies ^1^*775 ™ ^ small SiTSS of J e ^ a } mn B major supplier nof home management and educ.v
such as Xerox is seen as giving ml2<i*J2SwS made ? fferIng auetaae. Biere t The ufe of computers for
.it a belated legitimacy. rS SSS? Tat sophisticated videogames con-
'.it a belated legitimacy. ' __
The personal computer, cost- - panieT e n oLaW\^InLei n MotoroTa j ?c5?J ne £ s ‘"^^^ating trusts with earlier '’prediction's
ing anything between £70 and jmd Ziioe ’ an{ * I6-b.it chips which can that they would be mainly used
£10.000, has been .transformed Two engineers in a shed are * WJder range of softWAre - in the home for controlling elee-
from a toy for videogames — or now perfectly capable of putting The u - s - is substan- trical appliances, house-keeping
a plaything for computer buffs t n pp*h<»r a mmimw wWrh tiaHy ahead of that of Europe, and energy management.
mto a business tool. with a could compete with IBM’s “ Per- also d ^ ffers because home So far in Europe, the greater
wide range of applications. It Computer” on perfor- computers, selling for around part of the personal computer
is widely agreed that- the per- mance (They would not. of * 200 t0 * 500 > have become the sales are to businesses. Home
sonil computer came of age course' have IBM's massive consumer electronic pro- computers in Europe seem tn
when a program ealled Visicalc economies of scale > The fall in duet for m&as merchandisers, be used more for educational
was written for the Apple com- prices in persona"], computer Commodore computers are now reasons than in the U.S. Clive
Puter. ’ has. been because the semi-con- on sale in Safeway (with Sinclair attributes much of
Visicalc is an accounting 'pro- duotor manufacture™ have been around 2.000 stores in the U.S.) success of th* best selling pc^-
gram on a computer which able to cram ever more com- which, as a major outlet fn*- ronal computer of all — his
enables a businessman, to. ask., ponents onto a -microchip. ■ Timex. Is also expected to sell fro XZ«1 to people bv«Hw*
“what if?” type of questions. Its The computers themselves fall Clive Sinclair’s new computer, them hut to learn about
arrival catapulted Apple sales Into two broad types, based ibe Spectrum. . . computing,
upwards as individuals in com- aroiind two. generations of. A number of the major Schools are also stimulating
The U.S. market is substan- tries] appliances, house-keeping
tially ahead of that of Europe, and energy management.
□umber
them imt to learn about
computing.
Schools are also stimulating
panies, tired of the. wall and microprocessor chips, the S-bit department stores carry the interest in computer education
expense of doing such calcula- and 16-bit. The Isaer is several product range of one or more and they are becoming one of
tions on a large computer,- times mpre powerful and is fast of the companies. The most the fastest growth areas both
bought their.persoaal c'oniputer becoming the standard require- successful home computers in sides of the Atlantic. In the
out - of departmental budgets-^j^nt for - business . uses while the U.S. oorae from Texas UJC, France and Germany there
Visieak Is now avalB^e.TJff lt~.tSe ' S-bit machines are more Instruments, Atari and Cammo- are now plans to ensure every
secondary school has at least
one computer. In the U.S.
schools which were typically
buying two a year are now
buying four or five.
YeL business buyers are still
the largest element in both the
U.S. and European markets. In
the U.S., Tandy leads the busi-
ness market closely pursued by
Apple and IBM. The largest
sector is sales to small busines-
ses. DEC, the minicomputer
company that bas risen to be
the world's second largest com-
puter manufacturer has just
announced the launch of three
micro-computers with very low
prices. It is expected to become
a major force.
Small businesses use the com-
puters to run their organisa-
tion's accounts, billings, payroll.
They are often used as word pro-
cessors. In Europe there are
slightly more microcomputers in
large organisations, where they
are used in general accounting,
than in small businesses.
The greatest growth area in
business is. Gteraily as a per-
sonal computer. Inteco. the
market research organisation,
estimates the number of per-
sonal microcomputers in large
companies in Europe will rise
from 20,000 in 1080 to 680,000
in 1985, over three times the
number in small businesses.
In a study of how people in
large organisations used their
personal computer it found one-
third using them for 'what if*
questions on Visicalc type of
products. Nearly 20 per cent
used them for various adminis-
trative purposes and 8 per cent
as on intelligent terminal for a
larger computer.
Inteco found 7 per cent used
them for stock control. 7-8 per
cent for education and evalua-
tion, 4 per cent as a “super
calculator" and a wide range of
other applications such as esti-
mating, computer aided design
and quality control programmes.
The extraordinary prolifera-
tion of computers and companies
is prompting debate about how
long it will be before there most
be a major shakeout.
The crucial factors now are:
the availability of a wide range
of software, distribution, ser-
vice, and even the quality of the
in«tmc»iQn manuals.
Ian Galbraith at Mackintosh
Consultants points out Lhere is
tremendous difficulty in deter-
mining the most cost-effective
route to sell personal computers.
The options are enormous. At a
retail level there are specialist
computer shops, general depart-
ment stores and company owned
shops such as those set up by'
IBM, Xerox and DEC.
Second, there are computer
centres set up by the. manufac-
turers- Potential buyers are
persuaded to visit them through
seminars, mail shots, telephone
selling and so on .and they can
try the computers. Third is
through the traditional' office
equipment channel of dealers
and agents and, fourth, there is
direct selling to large companies
for bulk orders.
Poor distribution channels is
-one' reason why - so far the
WORLD MARKET FOR
PERSONAL COMPUTERS
(Sbn)
Education
1981
1.2
1987
(forecast)
3 S
Individual and
scientific
U
4 A
Small business
3.4
12.1
Large 'business
3D
13J
Home and hobby
1.9
U
Source: Stratogrc Internaiionol.
San Jos m. California
Japanese challenge has been
less than feared.
But Japanese companies have
recently announced a host of
new personal computers. They
include NEC, with a new 16-bit
machine, Hitachi, Sony, Pana-
sonic. Cybernet and C. Itoh. i
Although the direct threat of
Japanese competition in per-
sonal computers is not seen as
great as in other consumer elec-[
tronics areas the country is still .
going lo do very well out of the >
boom. Practically all the video
displays and many of the mag-
netic disc memories and
printers in personal computers
are made in Japan.
The Japanese have also been
specialising in hand-held com-
puters which have very small
liquid crystal displays and tiny
printers. The field for portable
computers has been led by
Osborne, a fast growing U.S-
company founded by Britisb-
boru Adam Osborne.
The personal computer mar-
ket is changing almost by the
day and no wise analyst would
predict how it will develop. But
it certainly is a strong contender
for the title of “Fastest Growth
Industry ever."'
By Ian Davidson
ONE OF the most important
recommendations of Lord Scar-
man's report >on the Brixton dis-
orders. published last November
was that chief constables and
police authorities -should be re-
quired to set up machinery for
consultation between the police
and the community at district
or divisional level. In Lord
Sea rm an’ 5 view — and his was
only an eloquent and forceful
restatement of traditional doc-
trine on policing in Britain —
civilised and effective policing
can only be carried on with the
consent of the community; the
riots in Brixton and elsewhere
had shown how far that consent
had in some places been alien-
ated; energetic steps must be
taken to restore relations
between the police and the com-
munity by. among other things,
regular consultation procedures
at the grass roots.
The consultation guidelines
which have now been circulated
by the Home Office go a -long
way to meeting Lord Seaman's
recommendations. I am not sure
that they go quite far enough,
but I shall come baek to that
later.
First the plus points. All
police authorities in the country,
and all borough and district
councils in the Metropolitan
Police district in London, will
now be expected to set up local
consultation machinery, very-
much along the Scarman lines;
but the way they comply with
this recommendation is left
pretty much to them.
The Home Office does not pre-
scribe the size of composition
of local committees; but it does
make suggestions of the kinds
of agencies that might be rep-
resented. such as probation,
education, social services and
recreation, as well as locally
elected representatives. Nor
does it prescribe the agenda for
meetings; but it does list some
suggestions — issues ef local con-
cern. promotion ef crime pre-
vention, fostering links with
local beat officers.
The reasons for this apparent
vagueness are threefold. In the
first place, circumstances vary,
and the kind of elaborate and
formal consultation which might
be desirable in Toxteth could
well represent overkill in the
Fens of East Anglia. Secondly,
quite a lot of police forces
already have local consultation
machinery, or have been improv-
ing it since the Scarman report
came out, and it would be gratu-
itous to force them into a differ-
ently shaped bed of Procrustes.
Thirdly, some chief constables
and some police authorities are
resistant to the idea of local
consultation, for fear that it
might undermine their own
authority.
The foot-draggers will net be
able simply to ignore the cir-
cular. nor to manipulate local
committees so that they are in-
effective. In London, for
example, the borough commit-
tees will have to report on their
meetings to the Commissioner,
and wiU be entitled to raise
matters with the Home Secre-
tary; and in general the Home
Secretary "will wish to satisfy
himself* that appropriate
arrangements have been made.
In an exercise designed to
promote generalised cooperation
and goodwill, some ambiguity is
perhaps unavoidable; but on two
issues the Home Office has, in
its desire not to offend the
police, carried ambiguity to the
point of confusion. It suggests
that committees should discuss
potieing responses to crime
problems which may affect re-
lations with the community; hut
It then says firmly that the
method and timing of police
operations are matters for ehief
constables.
Such a blanket exclusion
would rule out any discussion
of a repeat performance of last
year’s Swamp 81 in Brixton; if
so. the consultation process
would be meaningless.
Secondly, the committees are
invited to discuss general com-
plaints about the police, but
they may not discuss particular
complaints; but how on earth
will they do the former, unless
they have ready access to the
latter?
Finally, why has the Home
Office not undertaken to mak6
local consultation a statutory
obligation? It could easily be
incorporated into the Police
Bill next parliamentary session,
which will reform the com-
plaints procedure, and it could
be quite simple: “Police author^
ities and chief constables shall
satisfy the Home Secretary that
they have established appropri-
ate consultation procedures at
local or divisional level."
Letters to the Editor
The closed shop: efficiency and trade union power
From the Director General
Institute of Directors. .
• Sir, — John Lloyd's thoughtful
article (June 14) on the closed
shop (“ The wrong issue, for
Mr Tebbit”) was disturbing in
two respects. It failed to deal
adequately with the. effects of
the 1 closed shop on efficiency,,
and it understated, the. effects
on trade union power.
In campaigning for legislative
action on vthe closed shop and
in warmly welcoming the
measures contained ' in .the
Employment Bill, this institute;
has been very conscious of the
potential effects of closed shops
on companies’ efficiency. We
believe -that closed shops,
irrespective of the particular
forms they may take, - can: a)
delay the introduction of new
technology, aimed at improving
performance, profitability and
competitiveness, if the proposed'
changes alter the nature of skill
requirements, and thus the
delineation of classes of
employee; b) obstruct ' the
removal of restrictive practices;
because this may be seen as
blurring the distinction between
classes of employee, In respect
of which, .separate closed shop
agreements may apply; c)
undermine effective .manage-
ment, partly because disci-
plinary powers may be trans-
ferred from management to
shop stewards and partly also
because managers may tend to
lose touch With their employees
and look instead, to the single
channel of communication pro-
vided by their shop stewards;
and d) hinder changes which
may be sought to the structure
of bargaining arrangements. .
-John Lloyd tends, to discount
the efficiency arguments on the
basis of the . findings’ of the
unfinished and unpublished
Gennard study. He states -that
the. study has found that only
12 per cent of managers sur-
veyed regarded closed shops as
leading to inefficiencies. -Any
test of the' effect of closed 'shops
on efficiency can only be valid
if in-depth research" is con-
ducted company by company,
so that the wide variations in
types of closed shop and .com-
pany . structure can be taken
into account. It is - highly
questionable whether a test of
the opinion - of -personnel
managers (to which the Gen-
7iard study. has been confined)
is a sufficient indication of the
general view of management.
In the institute’s experience, the
views of personnel managers on
certain labour relations matters
tend to djffer markedly from
those of their other manage-
ment colleagues.
The second disturbing aspect
of the article was the sugges-
tion that managers seemed to
regard the increased bargaining
power which closed shops give
to trade unions as part of the
.normal give and' take of indus-
trial life. Whether or not. this
is the case, it is my conviction
that the increased power
enjoyed by .trade .unions
through closed shops has
allowed them to extract exces-
sive and .unearned wage
-increase’s, and has prevented
sufficiently quick adaptation to
change;.. Some - of. our fast
declining traditional industries
provide soriy examples of the
outcome of these events. The
problem is even worse in some
parts of the public .sector, where
there is 'not only a monopoly
of the product or service, but
also a labour monopoly in the
shape of a closed shop. In
such circumstances, there is no
pressure; on unions to ronstrain
wage demands, because there
is no competition to fear.- nor
is it likely that a strike would
receive leas than overwhelming
support. ...
. -As far as boards of directors
are concerned, past consulta-
tions with our members sup-,
ports the view that most con-
sider. Mr . Tebbit has rightly,
selected the closed shop as an
issue of major importance iii
the Employment Bill.
Walter Goldsmith,
J16, Pall Mall, SWJ.
-A cause of
inflation
Prom Dr. ff. Poof _
Sir, — -The recent European
monetary system re-alignment
. draws attention to the link be-
tween green currencies (to
common agricultural policy
agricultural’ exchange rates):
and. inflation.
Britain, -in the 3970s, -led the
way in preventing the effects
of profligate spending, leading
to -devaluations, showing up h*
food 'prices. The French are do-:
ing the same. The argument is
that some artificial" restraint of .
food prices is' necessary to check
inflation. Actually, it serves to
disguise from the population .at
large one of the. most direct, and
obvious, consequences of its
own inflationary actions.
Similarly, in UK now we have
artific iall y high food prices, re-
sulting from a “green” rate in
line 'with;- a view of the value
of sterling not shared by the
markets or, enjoyed by any other
industry. This denies consumers
—all of. us— one direct reward
wt should expect from a realistic
monetary . policyr-lower - food
price* v.vv
Divergencies, becoming more
common, between "green" and
market exchange rates, besides
being prohibited by the . Home
Treaty, are I suggest, a cause of,,
not a ciirt for. Inflation.
(Dr) R. A- H. Fool.
Higher Trayne,
Ilfracombe. Devon.
A great-hearted
lady
From the Director.
Central Asian Research Centre
Sir, — While the Falklands
expedition was still under way,
one of . your contributors (Lom-
bard, May 18) drew for us a
gloomy omen from the
Athenians' disastrous expedi-
tion 'to Sicily, .and’ from the
cautionary words of Thucydides
about the likely fate of great
armadas far from home. May
one now rehabilitate the great
historian by recalling that it-
was Thucydides who made his
own hero Pericles .say; “If
the alternative should come
between submission with loss
of independence, and danger
with the' hope of preserving
that independence, . then It is
he- who will not. aacept the risk
that deserves the - blame, not
he that will accept it." ’
But perhaps It is Aeschylus
who will best restore oar faith
' In the ability "of the Greeks to
find a word for. it— oi* rather,
in this case, to find a word for
her. Please read in “ Agamem-
non." about. the manly qualities
of a certain greathearted lady
— spoken J>y her .watchman, up
on the roof, peering for the
beacon flame that will signal
the fall of Troy,, and the
expedition's victory. But of
course -that was. legend — not
history at all. ,
David tforison.
Central Asian Research Centre,
S Wakley Street, SCI.
Abolition of ;
maintenance
From Mr P. Berry
Sir,— Mr J. Eedle (June 5) is
obviously imt aware that the
matriarchal society, he considers
such a practical solution to the •
he who will not accept the risk
that deserves the blame, not
difficulties posed by a high
divorce rate loss is already with
us, at least so far as divorced
persons are concerned.
Under the present divorce
law. the right of an ex-wife to
maintenance is an asset which
is frequently " horse-traded " for
the husband’s share of the
matrimonial home.
Alternatively, if a mainten-
ance order is deemed necessary
by the oourt. the wife may be
awarded the husband’s share of
the matrimonial home by way of
compensation for loss of pen- 1
si on rights.
Either way. the husband is
rendered homeless and is
deprived of his capital and
often re- mn rries to provide him-
self with housing of a reason-
able standard. :
Ha vine carefully read your
report of May 24.1 find no refer-
ence » The substitution of a
sinele financial settlement for
maintenance and I can only
conclude that Mr Eedle has
totally failed to appreciate the
aims of the pressure group. In-
deed, on the basis described in
your report, the Campaign for
Justice in Divorce is seeking the
- abolition of maintenance, as a
result of which capital settle-
ments in lieu would no looker
be . available to, and enforceable
hy. er-wives.
Even limited experience of
the divorce law demonstrates
that there is no cause to doubt
,the numeracy and economic
sense of women.
P. Berry.
46 Market Street.
Chapel-en-le-Frith, . .
Derbyshire.
Accounting for
deflation
From Mr M. Fielding,
Sir;— But for, the high level of
inflation during the past 10-15
years, it is. doubtful that the con-
cept of current cost accounting
would even have been much
aired, in this country.
One thing I yjould like . the
proponents of CCA to explain is I
whether or not their proposals
will cope with deflation as well
as they believe they will for in-
flation. Surely it is not wise to
assume that inflation as we now
know it is here for ever and a
day. .
Personally, I doubt the wfe
dom of the' accounting profes-
sion’s hierachy in trying to foist
SSAP 16 upon commerce and
industry in this country and I
have every sympathy with Mr It
Michael whose letter appeared
on June 15.
Michael Fielding.
14 -Chiritoti Road,
Winchester. Hants.
LDfllED
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Companies and Markets
UK COMPANY NEWS
Bain Dawes | Aberdeen American to raise
turns in
BY CARLA RAPOPORT
£5.56mfor
nine months
IN' THE nine months to
December 31 19S1 Bain Dawes,
the London insurance broker
controlled by Ineheape. made
pre-tax profits of £5.5*}m
compared to £5.55m in the
previous full year to March 1981.
Mr Robin Warrender, chair-
man. says that the change of the
year end excluded the most
profitable quarter for the UK
broking businesses and the
group's underlying rate of
growth was about 25 per cent
The change of accounting
date to bring a common year-end
for all operations means that
apart from Bishepsgate Insur-
ance all the UK companies
including the holding company
were only in for nine months
while the overseas subsidiaries
maintained a full 12-month
contribution.
After tax and minorities net
profits amounted to £2.15m
(£2.34m> before extraordinary
debits of £5G,000 (£164,000).
Bain Dawes is paying dividends
totalling £895,000 (£1,116,000).
The reduction is due to the
retention of profits by {be
Australian company and the
intention to build up reserves
apart from the change in the
amounting period.
In his statement Mr Warrender
says that UK non-marine broking
activities are still largely
gloomy. The recession together
with the reductions in premium
rating have seriously affected
profit margins. " However, new
business successes were notable,
and these, added to higher
investment Income, provided
some redress."
The marine and energy
resources division had a
successful nine months with
brokerage increasing by 25 per
cent. The aviation division has
stemmed the substantial Tosses
cf the past although the outlook
is unexciting.
In North America the group
showed a higher profit and over-
seas non-marine business showed
improvements in a number of
areas.
Turning to the current year,
Mr Warrender says chat market
conditions will remain difficult
with intense competition and
therefore the group must
continue to look for cutbacks in
overheads.
The group is also looking at
areas of expansion and is
currently in negotiations in the
U.S. to that end.
JUST WHEN you thought you
had seen the back of ail those
oil exploration experts with
their maps and diagrams, here
cnmes another group. This one
is called Aberdeen American
Petroleum and nest week, if all
goes well, Aberdeen should
announce plans to raise some
£16m in order to drill holes in
various bits of America.
The felling price of oil has-
reduced the flow of these kind of
companies in recent months.
The weakness of Opec crude
oil prices and the recent
stability In spot prices, Aberdeen
says, means that investment
opportunities and drilling
services are now cheaper than
they have been for some time.
It is counting on- its directors,
who include three ex-Sbell men,
io find the kinds of investments
which will allow it ' to start
paying dividends as soon as
1985.
This . is fairly optimistic
These who flecked to the market thinking. So far the young
in belter limes are now showing company has picked out 21 oil
distinctly sickly share prices, and gas prospects in the U.S..
But Aberdeen and its backers, stretching from Powder River
which includes Britannia Group Basin, Wyoming, to the Sait
Unit Trusts, Legal and General Pome Basin In Texas. li is
and County Bank, feel the time -investing in these areas through
is particularly ripe to be drilling six American companies, five of
in America. which are quoted.
The ratio of productive to dry
wells among these companies
vary, but there is certainly . no
hint from Aberdeen that any are
about to strike something like a
jack-pot. Rather, Aberdeen is
stressing its lack of attachment
to such glamour spots like the
Rocky Mountains Overthrust or
off-shore wells. This, plus the
sorry state of the market means
that Aberdeen has to pitch itself
as a bargain-basement entry into
this still-seductive business.
The company will be offering
15.5m shares at llOp, but the
shares will be partly-paid. The
investor will pay 35p co applica-
tion per share, of which 25p im-
partial payment 'of the nominal
amount, and lOp is payment. of
the premium.
These scares will, carry a
liability of 75p per share which
the company may calL Tbe
directors anticipate that there
will .be three 25p calls yearly
after the issue date of its
prospectus. .
The shares will be dealt under
rule 363f3). as the company does
' not. have the required profits
history to apply for the USM. Its
eventual aim is a full Stock
Exchange listing:
The 1 ■ company’s . backers
provided the £200,000 seed
money, to get (he company off
the ground and have undertaken
to subscribe for a further £3. 97m
as part of tins week T s offer. .
Brokers to the issue are Rowe
and Pitman and Greig Middleton.
County Bank is advising the
company.
Forexfund joins managed currency flood
BECK & POLLITZER
Beck and Pollitzer Engineer-
ing (Midlands) has changed its
name to Becks Industrial
Contracts.
A NEW managed currency fund
called Forexfund is to be
launched today by the Bermuda-
based Securities Selection and
headed by Charles Ranald. The
initial offer will be of Irn
shares at S10 each for which
Stock Exchange listing Is being
sought.
The fund, which is an open-
ended investment company, asms
to provide investors with a
medium through which they can
invest indirectly in bank
deposits and monetary instru-
ments denominated in various
currencies, to provide both
capital appreciation and income.
The minimum initial subscrip-
tion is for 2,000 shares and
investments vtfll be made in bank
deposits. Treasury bills and
other monetary instruments
with no more than 90 days'
maturity and denominated in
U.S. dollars, sterling deutsche-
marks, Swiss francs, Japanese
yen and any other freely
marketable currency.
There will be an initial charge
not exceeding 5 per cent of the
gross proceeds of the issue and
a quarterly fee of 1.375 per cent
per annum based on net asset
value.
Drayton Montagu Portfolio
Management will act as invest-
ment adviser to tbe managers.
During tbe 60s, Mr Ranald was
chairman and managing director
of the Castle Britannia Group of
unit trusts.
The following companies have notified
dares ol board meetings to The Stock
Exchange. Such meetings are usually
held lor the purpose o> considering
dividends. Official indications are not
avertable as to whether the dividends
ere interims or finals and the sub-
divisions shown below are based
mainly on last year's timetable.
BOARD MEETINGS
FUTURE DATES
June 28
June 22
TODAY
Finals: British Benzol Carbonising,
Chamber! Bin Phipps. Walker and Staff.
Whitscraft.
Interims:
Barr (A. G.}
Lookers
Finals:
Barker end Dobson
Estates and Agency
Gresham House Estate
Imperial Cont. Gas Assoc.
International Timber
Mayer (Montague L.)
Mitchell Somers
Shaw Carpets July 12
Triplex Foundries - June 24
Win trust June 22
Juns 28
June 24
June 22
July G
June 30
June 30
July 13
i comment
Forexfund joins
what has
become., a stream — or is it a
flood — of funds seeking to
exploit the lifting of exchange
controls. This one, however, is
based in Bermuda and, therefore
will not be affected by reimpo&i-
tion of controls. With a $20,000
minimum entry fee it is clearly
not designed for tbe small
investor and its charges do not
make it a bargain, in this field.
Nevertheless, for those wbo do
not want the excitement or
effort of self-switching currencies
then the managed aspects will
appeal, providing that it can
perform.
Little change
midway at
Charter Trust
- Investment income at the
Charter Trust and Agency,
investment trust, improved from
£l,01m to £1.19m in the six
months to May 31 .1982. Other
income — deposit interest and
underwriting commission — was
down from £36,929 to £20.385.,
The interim' dividend is un-
changed at 0.925p net — last
year's total was 3.45p. Net
earnings per 25p stock unit rose
from 1.45p to 1.74p, and net asset
value per slock unit was 105.4p
(106.9p) or 105.3p • U06J8p)
adjusted for full conversion of
loan stock.
Valuation of investments,
after deducting net- current
liabilities, were -£44.56m
(£45.17m).
British and American
Film jumps to £0.32m
Taxable profits of British &
American Film Holdings
advanced from £112,607 to
£321,221 for the 1981 year and an
increased final : dividend of
2.306p, against l:875p, raises the
net total by 0.431p to 3.306p per
5p share.
The figures were made up as to
holding company profits of
£200.406 (£253,689) and sub-
sidiaries profits of £120,815, com-
pared with a previous loss of
£141.082.
Holding company tax took
£51,708 (£49,955) and there were
extraordinary credits of £53,957
(£30,946) being net profits from
investment sales.
Stated earnings per share were
5Jlp (7.276p ) pre-extraordinary
items.
The figures of the subsidiaries,
derived principally from TV
sales, were subject to a tax credit
of £763 (£25.172 debit).
During the year the group took
advantage of the strength of
sterling to liquidate certain
dollar non-interest bearing stocks
and reinvested the proceeds in
Government stocks. The
resultant income will be reflected
in the accounts for 1982.
Jatel rises
to £144,814
RECENT ISSUES
EQUITIES
; c ° - d '
Issue 3 = a c a:
1082
price
•O I
Stock
, High ' Low
• Cti+ or > o3 £ S'- 2«'„-
,o l
o-
*«■ . — —13
•2SO.F.P.23 16 >880
46 1 F.P. 1 30/7 1 55
:90 ,F.P.2a,'6 1101
15 lF.P.15 4 i 52
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i265
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19
•Argyll Foods Warr'ts., j — ; — , r — i —
[Assoc. Heat Services 265 1—5 -bO.O .8.1; 4.0 15.4
Bal ratow Evm 5p | 52 i + I . >bl.61i 2.5, 4.4|l!.7
[■Smock (Michael) 20p: 05 ; ;u3.0 8.4 4.6|12J2
Cambrian & Gen. 7 ip, 30 I— I ! ~ 1 — I — ! —
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600 IF.P.I 2(7 ;650
77 If.P. 14/7 07
140 ,F.P, 29/6 178
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1 84
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1 88
160
19
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■Z-Dencora [ 57
'•{•Druck Hldgs >163
EJectro-ProL U5S0.B0 ' 92
Qrouplnv Option..,-'. 12
£McCarthy&Stono.Jl67
.•{•Miles 53 lOp. |Ji3
Oriflame SA (US5l.50l.605
•{•Radio City 'A' NV...I 89
•{■Ruddle iG.j lQp 176
.Stewart Nairn.. . ..i 23
Zambia Co na Opr 70X' 50
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1/12.4
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FIXED INTEREST STOCKS
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108 14! 100*4 [East Anglia Water *% Red. Prf. 1987_]101^
146 If 136 .First Nat. 12<ipo Conv. Una. Ln. 1987..
108 <>£>Lon&CantlU%Conv.Siib.Uns.Ln.'&&-02
98ta iMarlboroug h Props. 10* Cnv. Ln.'98-2002
24 iMidland Bk. 14% Sub. Uns. La. 2002-07.
11S 4 ; 11 Mid-Southern Wtr. 9* Pref. 1987 -
1007g|100rit Nationwide Bdg. Sac. 143<* (25/4/831 ___
100 J 99ft DO. 13T B * i23/5/83)!lOO
lOOlslOOig! Da. 13v:.Sl3«/83i-;100ia!
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11*« 10ic, Wrexham Water 9S Red. Prf. '87-09.... 11V 1...
140
108
981;
24
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100 is.
di
RIGHTS”
OFFERS
Am'unt
paid up
Latest
Renunc. 1
1982
stock
jfla. +or
* ■ ;
High.. Low i
'■ o a -
10
170 .
136 1
174 '
Kr.lH;
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325 1
215 |
10 I
133
F.P.'27/4
F.P 1.13/5
F.P.28/5
F.P.H8/6
Nil ( -
Nil ; -
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28/5
2478
0/7
50/7
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F.P.!
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17/6
5/7
|24/3
10/5
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30/7
13/8
23/4
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I 100 ;
1 180 I
; 233 i
i£5ipm|
| 250pm
l 8pm
I 446 |
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■' 12>*!
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10 lAnebaoher iHil Sp ......
180 ;Bank Leumi (UK1 £1—
158 'earless Cetref lOp
218 Grand Met 60p
£3pm .Great Northern Tel (£10/..
lBOpmiNorak Hydro (Kr.lOOl
2ispm'Pre»8 (Wm.i lOp
390 ISaatchl ft Saatchi lOp
30 pm [Sketch lay- -
9b Sturia lOp.
O Young (HJ ;
lOls.+Ji
166 l-fl
226 1
£3ym;+ •<
100pm —IB
21gpm — T
390 '-9
30pm —2
6i s _La
Taxable profits of Jatel the
investment holding company
with interests in Indian tea com-
panies and which is owned by
Camellia Investments, moved
ahead from £55.388 to £144,814
in 1981.
Earnings p^r £1 share are
stated at 6.68p (0.62p) and the
year’s single dividend is being
held at 4p net.
Profits after tax and extra-
ordinary items • emerged .'at
£389,703 (£14.597).
Shortfall at
Third Mile
Raeburn ahead
and boosts
interim by lp
BIDS AND DEALS
Closer links
between Telfos
and members
■Links between. Telfos, for-
raeriy Charles Clifford Indus-
tries, and shareholders
controlled or advised by its.
directors, have been . drawn
closer with- the; announcement
that Plantation -and General now
owns 12 per cent of the ordinary
shares-, and 22 per cent of its
12 . per cent convertible' loan
stock 1991. V; : .
Plantation . and General, one
of tbe principal underwriters
to -Telfos' rights Issue last year,
is controlled by Mr Konrad
Legg who is chief , executive of
Telfos. Jove. Investment Trust,
managed by, Rivermoor Manage
ment Services, .now controls 7
per cent of Telfos’ ordinary
shares; Mr Stephen Cockbum' is
chairman of Telfos and a direc-
tor of Rivennoor.
NCR PE3SSION:
ITS BREEDON
CUTS
STAKE
. The National Coal Board
Superannuation and' Pension
Schemes have., -sold 243,000
ordinary shares ta .Breedon and
Cloud Hill Ume" Works. Tbe
disposal, put through the: market
at l80p earlier this week, was
placed by 'stockbroker Cazenbve
with a small number of institu-
tional investors. It left the
vendor with a bolding of
312299 ordinary shares <6.44 per
cent).
BUiS’ZL CAPITAL
LIFTED TO £10M
After all charges including
tax, group profits of Third Mile
Investment Company dropped
from £124500 to £84^73 for 1981.
A same-again final dividend
has been declared of 0B75p
which holds the total at 1.575p.
Earnings per 25p share are given
down from 4B9p to 327p.
Group turnover, however,
moved ahead from £779233 to
£896.77S. There was a charge for
tax this time of £18,672, against
a previous credit of £11,679.
PENDING DIVIDENDS
- Dates when some of the more ' important company dividend
■statements may be expecied .in the next few weeks are given in the
fallowing table. The dates shown are those of last year's
announcements except where the forthcoming board meetings (in-
dicated thus 0 ) have been officially published. It should he
emphasised that dividends to be declared will not necessarily
be at the amounts in the column headed “ Announcement last year.”
Pre-tax revenue at-. Raeburn
Investment Trust rose from
£1.2Sm to £1.6m in the half-year
to May 31 1982. The interim
dividend is raised by lp to 3p—
last year’s total was 63p. bat the
directors say that in the absence
of unforeseen circumstances,
they expect a final of not less
than 4.5p, making 7.5p. .
Gross revenue was up from
£1.55m to £1.74xn. and interest
and expenses amounted to
£137,956 compared with £266,800.
There was a tax charge of
£608,071 (£450.3581. Stated earn-
ings per 25p share were higher
at 3.56p (2.98p), and net asset
value dipped from 22S.Sp to
227.8p after deducting prior
charges at par. or 227.6p
(22fl.5p) assuming full conver-
sion of loan stock.
Shareholders of' paper mid
packaging group Bunzl has
approved an increase in the cam
pony’s share capital from 32m
ordinary shares worth a nominal
£8m to 40m shares worth £10m.
Bunzl is currently, engaged in
a £13-Sm bid for prmtmg and
packaging group Bemrose with
an offer of I20p nominal of its
own convertible loan stock for
each Bemrose ordinary share.
Of Bunzl's authorised capital
26.19m ordinary 25p fully paid
shares worth a nominal £6-55m
have been issued. •
PRINCE OF WALES
HOTELS’ CAPITAL
Prince of Wales Hotels pro-
poses to Increase its capital to
rLTm by creation of 800,600
ordinary 25p sbares. The board
hopes to announce shortly an
acquisition which will involve the
issue of shares.
5PAH4
1982
June 18
Price
High
Low
%
356
335
Banco Bilbao ..
355
352
328
Banco Central
337
324
290
Banco Ewarior
306
337
336
Banco Hispano
316
115
110
Banco lad. Cat.
113
367
315
Banco Santander
• 348
233
187
Banco Urqui/o
187
395
352
Banco Vizcaya
• 369
250
216
Banco Zaragoza
245
180
128
Ding ados
126
TO
60
Espanota Zinc ...
63
66.5
58-2
Fecsa
65 5
50
32
Gal. Precis das
33
68 2
61.7
Hfdrola
62.2
59
50
Iborduero
51
10*5
81.5
Patrolaas
81.5
101
94
PetroLber
101
40
5.5
Sogofisa
7
74
- 68
TeiafonicB
W
68
58.7
Union Beet
58.7
ELECTRA INVST
Electra Investment Trust has
sotti 400.000 .shares.. ..in ^stock-
jobbers Ackfbyd and ' Bmithers.
Electra now holds 300,000 shares,
representing 5 per cent o' the
Acfcroyd issued share capita L
CITY ABERDEEN LAND
City Aberdeen Land’s offer to
acquire General-; Trust.- and
Heritages accepted io respect
of 13,100 ordinary shares (87.33
per cent), 12,737 preference
shares (87.15 per cent), and
39,000 deferred shares (97.5 per
cent). The • offers have been
declared unconditional.
RUSH AND TOMPKINS
Crilguy Holdings, part of
Nei-nrthill, the Sir Robert
M'-'toine construction group,
ha« increased its stake in Rush
am 1 Tompkins Group to 8.04
from 6.55 per cent
Data
Data
Henaaetatlan data usually last day feu- d Baling fraa of stamp duty, b Figures
baaad on prospectus astimata. d Dlvidarid rata paid or payable an 'part ol
capital: cover based on dividend on full capital, g Assumed dividend and yield,
t Indicated dividend: cover relates to prartrtoua dividend, P/E ratio 'based 1 on lAtsat
annual earnings, u Forecast dividend: cover based on previous year's earnings.
F Dividend and yield baaed an prospectus or other official estimates for. 1982.
Q Grose. T Figures assumed. * Figures or report awartad. t Cover allows for
conversion ol shares not now ranking for dividend or ranking only for restricted
dividends. § Placing price, p Pence unless otherwise Indicated. 1 1ssued by
tender. 1 Offered to holders of ordinary shares as a “rights." *~lssuad by way of
caoitaflaatinn. |§ Reintroduced. 11 Issued in connection with rsQigan Isa non,
merger or take-over. g| Introduction. 3 Issued to former preference holders.
■ Allotment letters (or fully-paid). • Provisional or partly-paid allotment letters.
4- Wiih warrants. ft Dealings -.under special Rule. -5* Unlisted Securities
Market, ft London Listing. • t Effective iaeua price after scrip, f Formerly
dealt' m under Rule 153(2) (a). A Issued free as. an onurloment to ordinary'
holders.
Acrow
Allied
Colloids.
Allnao
London.
Associated
Newspapers.
•BPB Inds
•Bauer Parkins
Bank
Leumi (UK).
Bath and
Portland.
•Billon (Percy).
Brown (John)
‘Controvincial
Estates..
•Charter Cana..
•Chubb '
Daily Mail &
Gen Tst
Davy Corpn .
Distillers
Dixons
Phorograohic.
Dowry
Electro-
Corn ponan ts. # .
•Ferranti
Rreh Loveff .
•GE1 Inti
Goa tel nor ....
Grenade
GUS
•Greene King .
•HAT Group
•Hambros ....
Healemere
Estates
Hogg
Robinson
Illingworth
Morris
-July 28
..July 16
..July 16
Announco-
mont last
year
Announce-
ment last
year
Final 0.75
Final 2 087
Final 3.4
..July 15
-June 30
June 24
interim 4.5
Final 5.0
Final 3.0
..July 27 Interim 3.15
..July 15
■July 26
July 24
Interim 2.0
Final 4.4
Final 2 5
June 22
June 22
-June 23
Final 1.33
Final 6.6
Fine) 3.478
..July 15
•July 23
..July 16
Interim 11.0
Final 4.7 -
Final 7.75 ’
..July 30
..July 21
Final 2.178
Final 2.8
June 25
.June 23
r.Jufy 30
.June 22
..July 16
-July 1
July 16
..July 1
..July 13
June 22
Final 5.5
Final 4.0
Final 3.TT
Final 3.555
Interim '1.25
Interim 1.75
Final 8.0
Final 4.2
Final 1.25
Final 160.0
-July 16
..July 21
..July 17
Final 4.56
ICI July 30
•Imperial
Cont Gas July 6
Imperial
Group. ..July 9
Initial July 20
•International
Timber. June 30
LRC lniernaif...July 13
Lex Service . .July 30
•Lloyds Bank ...July 23
Lonrho July 30
MF1 Furniture... July 23
Magnet and
Southerns... July 14
•Meyar
(Mont L.I. June 30
Midland Bank. ..July 31
NatWesi July 28
•Norcinsj -.June 28
Nottingham
Mant — July 27
•Poweil
DuPryn — June 23
•Raeal
Electronics ..June 22
•Rank
Organisation. ..July 12
•Radland June 24
•Ranald June 24
Rothmans
Inti... July 16
SGB June 30
Scottish & Newc.
Brewanes. ..July 2
600 Group .... June 11
Thom EMI July 10
•Trusthouse
.Forte June 24
Unigate July 16
•Union
Discount.. .July 21
Vantona July 28
•Wedgwood ...June 18
•Whitecroh ...June 21
Interim 9.Q
Final 5.3
Intonm 2.75
Final 6.25
Final 2.0
Final 1.8
Interim 2.8
Interim 8.625
Interim 3.0
Final 1.52
Final 3.0
Final 1.25
Interim 8.0
Interim 9.625
Final 3.56
Interim 1.1
Final 9.55
Final 3.4
Interim 4.8
Final 4.67
Final nil
Final 2.65
Interim 2.3
Final 2.B75
Final 2.91
Final 10 575
Interim 1 .5
Final 4.0
Interim 9.0
Interim 3.0
Final 2.42S
Final 2 6
Final 3.0
Final nil
• Board meeting intimated, t Rights
isfue since made, t Tax frea. 5 Scrip
issue since made. 7 Forecast.
Public Works Loan Board rates
Effective June 16
Quota loans repaid
at
Non-quota loam A* repaid
at
Years
by ElPf
A*
maturity!
byEIPt
At
maturity!
Up 10 5
... 13}
13}
13J
14}
14}
14*
... 13}
131
133
148
144
I4J
LtWTHT'fTmH
- 138
133
14
14i
14}
. isfi
Over 7, up to 8 ...
... 133
134
14
148
14}
15}
i t - i 4'HTTni
... 13}
13}
131
148
• U4
14}
V J sMTflvSr'sB?
13S
135
13j
14!
14?
14}
1 1 1 Ikffiw Ni Lre
... 14
131
13}
14}
141
14}
Over 15, up to 25
... 133
13}
13}
14!
14 J
14!
Over 25
-.-v.i3i
133
13!
143
14}
148
Non-quota loans B are
1 per pent higher in
each case than
R-quota loans A. t Equal instalments of principal, t Repayment
ny half-yearly an nuily ..(fixed equal half-yearly payments to include
principal and interest). S With halF-yearly payments of interest only.
M. J. H. Nightingale & Co. Limited
27/28 Lovar Lane London £C3R 8E6
Telephone 01-621 1212
EOQO’a
capitalisation Company
Change Gross Yield
Price on week div.{p} %
Fully
Actual taxed
4.044
Ass. Bfit Ind. Ord. ...
120
—
6.4
5.3
10 9
13.4
—
' Abb. Brit. ind. CULS...
128
_
10.0
7.8
4,052
Aireprung Group
70
-1
6.1
87
SO
13.7
1,075
Arnunge & Rhodes ...
43
+2
4.3
TOO
36
ST
13.320
Berdon Hill
218
+3
9.7
4.4
10.6
12.9
1.363
CCL llpc Conv. Prof....
109
15.7
14.4
4.189
Cindico Group’
265
.
25.4
10.0
10.7
120
4.643
Deborah Services
60
-1
6.0
10.0
3.0
5.6
4.143
Frank HoreeN ..
130
6.4
4.9
11.7
24.1
10.E9Q
Frederick Parker
74
6«
8.6
3.8
72
996
George 61/rir
54
-T-
—
• —
—
3.380
Ind. Precision* Castings
38
-1
7.3
7.4
7.1
10.7
2.520
Isis Conv. Pref
Iffiixd
-5
15.7
15.0
— -
2.882
Jackson Group
106
+ 1
.7.6 -
7.1
3.3
6.S
15,596
James Bur rough ■.
ll3*d
-2
9.6
8-5
82
92
2,346
Robert Jenkins
230
31 J
13.6
3.2
8.1
3,510
Seiuttons "A”
6 8*3 ltd
-2b
57
8 3
89
10.7
3,759
Torbay & Carlisle
)54xd
-4 .
11.4
7.4
63
11.8
3,472
Twinlock Ord
15*4
_
2.137
Twinlock ISpc ULS
79
+ 1
16.0
10.0
—
3.815
Uni lock Holdings ......
25
—
3.0
12.0
4 5
7.6
10.630
Welter Alexander
84
_
64
78
5.5
9.8
. 5,484
W. S. Yoates
235
-1
14.5
6.2
62
12 3
Prices now available on Prestal page 48146,
This od'fhivmeni U issued in ummltmce Kith rhenjuimnniis of the
Council of The Stork Exchange. It duo* not constitute an 1 tmtathm to the public
to subscribe for or to purrhuse anjrshares. , •
BENLOX HOLDINGS pic
(Incarpumied in England under the Companies Act 1929 So. SSSS69I
Share Capital
Authorised
£
• 936,000
]. 564.000
8 per cent Convertible
Cumulative Redeemable
Preference Shares of £1 each
Ordinary Shares of lQp each
Issued. Fully Paid
' No. '. . £
. 936J300 (nil paid)
468.000 - 468.000
£1500.000
£468.000
The Convertible Cumulative Redeem able Preference Shares of£l each have
been admitted m the Official List by the Council of ihe Stock Exchange.
Panicutan of fhe Preference Shareware available in ihc Statistical Service of
Evlel Statistical Service, Limited and copies may he obtained during normal
business hours up io and including 9ih July. I9K2, from: —
21st June. 1982
Stafford St Co-
Leith House, 47-57 Gresham Street London EC2V TEJ.
3T
iiiikiL
5JH
OSLOAKERSHUS
(Incorporated In Che Klntdom.of Norway j
U5^2S4MJ04»0
Subordinated Floating Rate Notes due 1987
In accordance with the provisions of. the Notes and. Agent Bank
Agreement between Spare ban ken Oslo Akershus and Citibank. NA..
dated December 17, 1980. notice is hereby given that the Race
of Interest has been fixed at I6j% pa, and that the interest
payable on the relevant Interest Payment Date. December 21. 1982,
against Coupon No. 4 in respect of U.S.55,000 nominal of the
Notes will be U.S.S415.20.
June 21, 7952
By: Citibank, N.A., Agent Bank
CITIBANK*
GREIG, MIDDLETON & CO.
The businesses of R. C. Greig & Co, and W. N. Middleton
St Co. are aferged with effect from 21 June 1982. The
existing offices in. Glasgow and London will continue at
the addresses shown below and a new branch office has
been established at 10A Union Street, Bristol BSI 2DG:
Telephone 0272-24013.
78 Old Broad Street
London EC2M LfE
Telephone 01-920 0481
139 St Vincent Streqf
Glasgow G2 5JP
Telephone: 04I-22I SJJ93
. j.'j.adiiu.su . ixiuea JiioutULy.. ufiiitJ d>l ±*iQ4.,
- ‘i-r -• ••-
, [Btarpnaird pi ad BaJaiH* /■« buA ~
Offer of 1,000,000
shares of US$1 par vdue
eachatanissnie
price of US $10 per share
-payable in foil on application
•>- * I' •- .7
EuU Particulars
aronp
6 & 7
1 . ■ :»
rrr ir ? T ? nr
Den Dansh^Bauk
af 1871 Aktieselskah • -
: . U.S.$-30 / 000 / 0CK) -
* Floating Rate Subordirwted NQtes dueX989
notice is Ker^ygrven that Ae ra tie of iriteeejE far* Hie period
‘ at 16-^op^r cent per annunrarid diat tbecOL^oti_
AgentBank-
Saudlinferi^tiori^ ' ,
AL-^ANK AL-SAU^J AL-ALAiti ' -J -|
ri t- t h it Tii T t r t nrr^TixrTtt^jr^
-7, ft A A A ^ i A a ^ mm,* *
BASE VEkDMG RATES
-'■■■-V-i' '■■“."-re*':* -V
• : A-BJ^. Bank
Allied- IrishiSank
■ 'American, Express:'- Bk: .12? __
. , Amro^anfc 12
Hemp; Ansfcacher- AZif,
Artinthhot Latham. ...121%
r . ‘ Associates Cap^ vCorp. J.3 ;%
Banco de ‘Bilbao- 12|%:
■ bcci 12 *%
. Bank Hapoalim BM ... 124-%
Bank of Ireland 12|%
Baihk Leunri .IITK) pic 12
Bank of Cyprus 121%
Bank Street- Sec. Ltd; 14’:%'
- Bank of N.SAV.-.w....;.: 12|%
Banque Beige Ltd.
. Banque du Rhone et de . v: C '• '
la -Tamise SiA. —■■■13 %
Barclays Bank. — —
Beneficial' Trust, Ltd;' i.:- *l3f
B re mar HoklingsLtd: 13}%
BriL Bank of Mid.. East. 12 J% -
■ Brown Shiprey- T- 13
Canada Perra.’t Trust-.. 13 %...
Castle Court- Trust Ltd. 13 T».
- Cavendish JTtyTst Ltd; 14 %
Cayzer Ltd-t-V. ........ 1 2 \ % ,
Cedar Holdings -., , 13 %
■ Chartertiduse daphet ...T2£%
Choulanbns 13 %
Citibanfi ^rings' -:..512f%
aydesdale. Bank 12?%
. C. JE.. Coates-—..: :
Comm. Bk. : of Near East 12|%
. Consolidated Credits... 13 %
- - Coopeiiativiif Bank . .... ..*121 %
Corinthian Secs. 121%
The Cyprus Popular Bk. 124 %
■ Duncan Lawrie 124% ’
EagU Trust ....' 121%
E.T. Trust' — : 13 %
. Exeter Trust Ltd — ... 23}%
First Nat, Fjn. Corp.:.. 154%
First Nat. Secs. Ltd.... 15}%
“•: Robot 'Fraser 13 %\
. ' ..Grindlays Bank ; *1 2b%;
■M .Guinness- Mahon 12i% .
* Hambros Bank .12}%'
Heritable ft.-Gen. Trus£_J2i%,‘
■ Hill- Siirmel- . ™.._-.:^12{% ■
C. :Hoare Cp.' if 32}% ’
Hongkong. & Shanghai 12}%-
Kingsnortii - Trust Ltd . 14
' Khowsley & Go. Ltd.-... 13 %
. Uoya* Bank . 121 % .
-,'Maifinbafl.--|UzntftBd•T: , .; 12|%-
.• EdvtfarifMansdri&Co. 13}% <
JEd&pd - Bank • a.-. 12 i % : -
* Samuel.. Mbotagu -■ 124% .
! MMOrgatt' Grenfell ' .r.. . . 12} %:
■j ^National - ' Westminster 12}%;
worwi’di General Trust ' 12} %■
: P. v S.ORefsdn & Co. ....... '12}%)
''Roxbxir^ie Guarantee 13
.^■ E;- S'. Schwab 13 p 1
Slaven burg’s. Bazik ... 12}%l
. -Standard Chartered r:-.IH2}%]
Trade Dev.. Bank 12}%;
Trustee Savings Bank 12}%',
TCB 12}%:
_ United Bdnk of Kuwait 12}%;
Whi teaway Laidlaw 13
Williams '& Glyn’s "... 12}
Wintrust SCcs. LtdJ:'..; £2r
■ Yorkshire Bank 12
■ Members -'bl-jthe Accepting ' lie
-CommltMa. - -
•7- day Vdapoelt* sr.5%;"
9.75%. Shan term . £8:000/12
month- 12.1%.- ' .
7-dey deposits on sumo of: : dnder
£10.000 9*i%, El 0.000 vp 10
£50.000 10V%, £50.000 end -over
• .- . ;
Cell deposits £1,000 'end -aver
9h%. x ’ ;
Zl -day "deposits over £1.000 10*2%.
Demand deposits 94% ;
Mortgage base rate. '
SPARBANKERNAS BANK
U.S. $ 20,000,000
NEGOTIABLE FLOATING RATE
CERTIFICATES CF DEPOSIT
DUE 1983
In accordance with the provisions ot the Certificates of Deposat
notice is hereby given that for the six month Interest Period
from June 21. 1982 to December 20. 1982
the Certificates will carry an Interest Rate of 16.37556 per annum.
Agent ; -
FINANCE FOR INDUSTRY TERM DEPOSITS,
Interest paid gross, half-yearly. Rates for deposits recrivexi not later than -
25/6/82 .'■■■-
Terms (yean) 3 -4- : 5- 6 ; 7'. 8 8 V 10
INTEREST % 13} 13} 13* ' 13} ISj'- lS/ ' lSf
Deposits to and further inf omia nqn Erom TheTreasurer, Kuince fw
OieqiKstayabletp "BankofEr^nd, atEFPFH'
L.ss dtohpkimg-ajnqjaiiy fbrJCFCandFQQ-.
THE TRING HALL '
' • USM ‘INDEX >s -
125B (7-q^). .
(Dose *( business 18/6/82
Teli 01*638 .1591. -
BASE DATE 10/11/80 100
liADBROKE -BVDEX I .
' aose 5S2^57 (-2) / ’
10
• value
e
ion
SS
--Viltau,, u -4.%. uJ,
BUILDING AND CIVIL ENGINEERING
Public housing outlook bleak
THE
reduction
Go venunent inspired shown a steep downward trend
housing acSvitv bl iL *E 25 * lnce ■“‘“W could this
s%##s Isis-s
1984. With corn-
ill 1982-3 indicate a marginal
real Increase over the previous
financial year tin which there
was a substantia] underspend).
But the total includes the pro-
vision of £5B3m from capital
and
Committees. : Deve!oi>IDen ^ Pleti&ns set to f aU this year receipts arising from housing
The -forecasts, which lact !n fS! ind f 4,00 ? ? gainst S 5 - 0 ® 3 and land sales, an increase of
week snssmted that tKL 2^ 1 ? 1M . 1 * and with further reduC-
■SfSHSflSSShfi'eSr 2E I 9 ® and activity
E5£-3s~R ftiS-Ss
jSSSte-ffS-ffiS of pub!* “Thyreoid 11 ”IX ^
SrS“E~ ssf SffirS
f rte. provide “ T ™- sSp^-s ............ - ....
■-SW j-sCjfi'saasas: ssw-rsKmSs
w w year due to make a start on around goes on. -. Sales
£180m oyer the previous year.
local authorities may "opt to
increase revenue through
interest income, to help limit
rent increases, or they could
retain- receipts ro provide a
badly needed degree of flexi-
bility- at a time when they have
to operate under tight financial
control. :
While, the squeeze on the
Taylor Woodrow to build
£20m television complex
hy-37 per cent in value terms
and a further 21 per cent reduc-
tion- expected- this year
Another 5 per cent reduction
looks likely in 1983.
.Translated into numbers
public sector starts {Which have
i n a/wi t ■ ■ ■ "■* ’ w ““ m o ,, . w ui| « '• kpa * c - 1 in 1981-4J2
irJHJ , fto i? es thl s gainst reached aVom 130.000 and thev
10,000 last year. Little further ar» expected to reach a peak n‘f
CTowth IS seen, however, beyond 165.000 In flip current financial
th !rL year - _ . year. During the 1970s. thp
me committees point out that annual sales rate hovered
Tne housing investment pro- around 20.900.
gramme allocatioas for England '• MICHAEL CASSELL
lank
Mini airport
for dockland
proposed
now evaluating a proposal from
John Mowlem and Brvmon
Airways of Plymouth to build
a short take-off and landing
“mini” airport in the Royal
Docks area of Newham.
AROUND THE INDUSTRY
A?
community. In Southampton. The shelter
rite new genera bon of STOL has room for 20 people and
aircraft are very quiet and safe includes a power module for
ana are specifically "designed to lighting. . The installed cost,
operate in urban areas, '* he inclusive of ventilating equip-
added. * raexa and blast valves varies
_ The consortium is emphasis- between £35,000 and £40,000
THE - LONDON Docklands ing that no decisions have yet dopentHng on site conditions and
Development Corporation }s been taken' and although the « clus5ve o* interior finings.
pronosal has aroused interest *
within the Corporation, the
scheme must prove favourable
to local residents.
A full feasibility- study has
_ been commissioned by the Cor- — , DUUJC vl. u .v
Tne programme of public con- poration and the result should revised British Standard BS 8262
sulfation includes a mobile be known in July. In the mean- Code of Practice for Glazing for
exhibition which is touring the time, there could be a demon- Buildings, will be available 'from
area, and a series of- community slraflon of a Dash 7 STOL air- July 1-
group meetings. . craft landing to satisfy local *
Mr Phitip Beck, chairman of residents about the impact of an
Mowlem, says that the provision airport facility.
THE CORRECT use of glazing,
la bttildfngs is a subject which
has aroused increasing interest
and the key document covering
this particular subject, the
of an. airport facility would plav
an. important part in' the
revitalisation of docklands and
claims' that it would not affect
the quality of life of the local
*
LATEST DESIGN in nuclear
fallout shelters, aimed specific-
ally at borough councils, has
come from Clifford Engineering
TAYLOR WOODROW is offering
discounts on its houses to ordi-
nary shareholders in the group.
Shareholders can expect a reduc-
tion of 1 per cent on final pur-
chase price. The offer doses on
August 31.
ll Bank !:
L**: /■ \ •
(■ • *:;*aw^*<* v
ATES
All over
London
at a site
near you
. .-l'J
‘ ^ i % - v ■
iHl'
A - ';***.< .
2-6Homesda]e Road, Bromley, Kent BR2 9TN- -
TELEPHONE: 01-464 3377 THI.EX: S96691 GE WALLIS
A CONTRACT, understood to be
worth between £l2m and £l4m,
for the construe tin of new tele-
vision studio complex for Cen-
tral Independent Television has
been won by TAYLOR WOOD-
ROW CONSTRUCTION (MID-
LANDS;.
Taylor Woodrow said that the
complex, in Lemon Road,
Nottingham, will be one of the
most technically advanced in
Europe. The total cost of the
scheme, which will -have a floor
area of 'about 250,000 sq ft, is
estimated at around £20m.
The complex will have three
main' production studios from
'which Central , will provide
locally produced programmes
for the East Midlands area and
for the independent television
network throughout Great
Britain.
The scheme is designed
around a central block which
will house the studios and plant
facilities. To the west of the
central block there will be a
two-slorey building which will
provide administration offices as
well as production and trans-
mission facilities. Another two-
storey building to the south will
provide catering ami general
staff facilities.
- Other parts of the complex
will provide facilities for
scenery construction, workshops,
crew rooms as well as a singie-
srorey staff restaurant. Taylor
Woodrow will also provide road-
ways, footpaths, car parking and
landscaping for the schemes
Construction work has already
started and is due for comple-
tion In autumn next year.
Richard Seifert are architects;.
H. L. Waterman, structural
engineers, and John Reddick
and Partners, quantity sur-
veyors. ■
This is the second television
complex to be built by Taylor
Woodrow (Midlands) which
constructed the BBC studio at
Pebble Mill in Birmingham,
opened in 1971.
. . . more home
contracts . . .
miles outside the city centre of
Liverpool, were constructed dur-
ing the local authority housing
boom of the 1960s using a pre-
cast concrete system build
method. Work, which started
some weeks ago is expected to
be complete in September. The
flats will remain occupied
throughout the refurbishment.
Liverpool City Council will
-award an extension of the con-
tract which - wilt incorporate a
further three blocks of flats at
an estimated cost of £430.000.
A regional distribution centre is
to be built for the House ' of
Fraser department store group
at Avonmouth near Bristol,
under a £2.6m contract awarded
to the south west .region of
•k
JOHN LAING CONSTRUCTION.
Work is to start soon on the con-
struction of the . high bay ware-
house of 77,500 sq ft— 47 ft to
the eaves— containing narrow
aisle storage, . intake and des-
patch areas, an attached two-
storey office building and exten-
sive parking and landscaped
areas. Completion is due in the
summer of 1BS3. Construction
is of concrete ground beams on
deep piles. The warehouse will
have a steel portal frame dad
in facing brick and block to the
lower levels with, profiled metal
sheeting to the upper levels and
roof. The office will be of load
bearing brick and block with
provision for an upward exten-
sion at a later date.
*
BOV1S CONSTRUCTION has
been awarded a contract valued
at £450,000 for the repair and
refurbishment of the external
elevations to two 16-storey tower
blocks. The work Includes the
repair of spalling concrete to
external cladding panels and
providing weatherlight joints be-
tween the individual external
elements of the buildings. This
remedial work will halt the
damage that is being caused to
the -structure by the ingress of
rain. These local authority flats
at Norris Green, some eight
5 B.A>- V ' .
)00 I 1
i
k-
•t, 7
This announcement appears as a matter of record only.
Inter-American
Development Bank
Dfls. 100,000,000
103/, per cent Dutch Guilder Bonds of 1982, dne 1988/1992
Annual coupons July 15.
Algemene Bank Nederland N.V.
Amsferdam-Rotterdam Bank N.V.
Bank Mees & Hope NV
Hollandsche Bank-Unie N.V.
Pierson; Heldring & Pierson NiV.
Banquede Paris etdesPays-Bas N.V. - •
Nederiandsche Middenstandsbank N.V.
Daiwa Europe N.V. _ ’
Deutsche Bank Aktiengesellschalt
Goldman Sachs International Corp.
Kuwait International Investment Co. sjELk.
Society G6n6rale
r . Union Bank of Switzerland (Secunties) Limited.
J, ’Uin&&:,i
A
A contract worth over £2. Ira, has
been awarded to WALTER LAW-
RENCE AND SON to build 79
homes at Sanford Manor, Kings
Road, SW6. for the Orbit General
Housing Association. The devel-
opment will consist of one tbree-
storey block of flats and a four-
storey sheltered housing block
together with two-storey houses.
The contractors will also under-
take all associated works includ-
ing landscaping. Work has
started and the contract period is
91 weeks.
•k
HENRY BOOT SCOTLAND is to
carry out a £1.5m management
contract for the construction of
a maintenance and service centre
for -geo technical analysts,
Schlumberger Inland Services
Inc of Aberdeen. Within this 1)
hectare project, designed to ser-
vice oil and gas exploration
equipment, are various labora-
tories, stores, security post, com-
pound and offices together with
associated external works and
drainage. Work has started, for
completion on November 30.
*
JOHN MOWLEM AND CO has
a second contract at RAF Con-
ingsby, Lincolnshire. Awarded
by the Property Services
Agency, the £1.3m project is to
construct two iarge storage
tanks for aviation fuel, along
with mechanical and electrical
installations, pipework, road
works, drainage and ancillary
buildings. Work has just started
and completion is due in Sep-
tember 1983.
*
G. E. WALLIS of Bromley has
won a contract worth £577,544 for
supplying and fixing new joinery
and. structural carpentry as part
of the restoration of the chamber
ceiling of the House of Lords. At
the same time. West of England
Restoration Studio of Bristol has
won a £91,870 contract for the
restoration of the painted panels
which form pan of the ceiling.
Longest rail tunnel
WITH PROSPECTS of an early
start to a fixed link across the
English Channel receding still
further, work is well advanced
on an equally dramatic and
ambitious project on the other
side of the world in Japan.
There is now only about
1.000 yards left to be bored to
complete the excavation of
Japan's 53.B km Seihan railway
tunnel, started ten years ago,
victim of its own faiq share of
delays, but now welL on the
way to completion.
The double-track rail tunnel,
designed to lake the 25G Ion
per hour Shinkansen “bullet
train," will link ihe islands of
Honshu and Hokkaido across
structi on would rake eight
years but in 1976, following a
series of problems, a three-year
delay was announced .and com-
pletion was expected in the
spring of this year. .
Now, the Corporation says it
expects to complete construc-
tion of the access railway
between the tunnel and the
existing railway by 1985.
Initially, it was planned that
trains of both the Shinkansen
U Lauda rd gauge) and ihe exist-
ing railway (narrow gauge)
would use The tunnel but de-
lays to the expansion of the
Shinkansen network mean that
it will be used only by tbe
existing railway in the initial
the Tsugaru Strait. Work on the' period of operation. The tunnel
link, between Tappi and
Yoshioka. began ten years hgo
and is being undertaken by the
Japan Railway Construction
Public Corporation of Tokyo.
Just over 23 km of the tunnel
will be under tbe sea.
The Seikan scheme will be
tbe world's longest railway
tunnel, eclipsing tbe proposed
52-5 km Strait of Dover link
and the existing 19.8 km
Simplon tunneL
Work on the tunnel, which
was surveyed initially in 1946.
began in 1971 after a 25-yea c
reconnaissance period. It was
originally estimated that con-
is also to be used as a telecom-
munications and electricity sup-
ply link between the two
islands.
During the ten-year tunnel-
ling programme, by a tunnel-
boring machine and drill and
blast methods, difficulties en-
countered included no fewer
than four inundations of sea
water and enormous ground
pressures. Water pressure — the
tunnel is beneath I40m of sea—
and seepage volume determined
that the tunnel would be cut
100m below the seabed.
Geological conditions also
provided problems and engin-
eers had to cope with highly-
fissured volcanic rocks, through
which water often seeps, as well
as faulting in sedimentary
rocks.
The delays have inevitably
meant big increases in costs. In
1971, it was reported that the
tunnel project would cost
Y200bn i£453m> but by 1976,
when delays were announced,
total cost forecasts had esca-
lated to Y355.4bn (£805m).
The tunnel is seen as a major
aid to improving the efficiency
of Japan's economy by connec-
ting two of the country’s four
principal islands and forming
the final link in the high-speed
rail network from northern
Hokkaido to Kyushu's southern
tip. a development which is ex-
pected at lean to triple the
volume of passenger and
freight traffic.
The Japan Railway construc-
tion Public Corporation has
estimated that by 1985 the
tunnel would be used by 25.4m
passengers, six times fhe 1972
traffic on the Seikan Ferryboat
Service. It is estimated that
freight traffic will reach 26.2m
tons by 1985, five times that in
1972.
The tunnel will reduce the
journey between Hakodate and
Aomori from 230 minutes to 130
minutes. The high-speed system,
combined with the tunnel, wil!
cut travelling time over the
1.200 km between Tokyo and
Sapporo. Hokkaido's capital, by
around two-thirds, to just twice
the air flight time. It will enable
a stable, massive .supply of
fresh vegetables and meat tn
Honshu from Hokkaido. Com-
petition from train fares could
halve air fares.
Seikan may prove, however,
too big an Investment for the
traffic jt will carry eventually.
Passenger and cargo traffic
across- the Tsugaru Strait
reportedly reached a peak—
4.8m passenger-journeys and .
8.5ra tonnes of .freight — in 1973.
after air and sea services had
established themselves, then
slumped by 46 per cent.
ALAN ELLIS
This advertisement complies with the requirements of the Council of The Stock Exchange.
It does not constitute an offer of, or invitation to subscribe for or purchase, any securities.
V. S. $200,000,000
The Bank of Nova Scotia
(A Canadian Chartered Bank)
FLOATING RATE DEBENTURES DUE JULY 1994
The following have agreed to purchase the Debentures:
MORGAN STANLEY INTERNATIONAL
AJtAB BANKING CORPORATION (ABC) SAN&UE NATIONALS DE PARIS
CREDIT SUISSE FIRST BOSTON LIMITED DEUTSCHE BANK AKTIENGESELLSC HAFT
GULF INTERNATIONAL BANK B.S.C. WJ INTERNATIONAL LIMITED
MANUFACTURERS HANOVER LIMITED MITSUBISHI BANK (EUROPE) S.A .
NIPPON CREDIT INTERNATIONAL (HK) LIMITED SALOMON BROTHERS INTERNATIONAL
SANWA BANK (UNDERWRITERS) LIMITED
SUMITOMO FINANCE INTERNATIONAL
SA UDI INTERNATIONAL BANK
Al-Baak Al-ikmdiAl-AIami Limited
DOMINION SECURITIES AMES LIMITED
The Debentures, in the denomination ofUB.S 10,000 with an issue price of 100 per cent, have been admitted to the
OfficialList by the Council ofThe Stock Exchange, subject only to the issue of the temporary global Debenture. Interest
is payable semi-annually in J uly and January commencing in January 1983.
PaiixularsoftheDebentv^areaiaikibleintkeExtelStatislicalSerxrieesLimite&dndmaybeobtainedduringTiormal
business hours on any weekday (Saturdays excepted) up to and including July, 5, 198$ from the brokers to the issue:
June 21 ,1982
Rowe & Pitman,
City-Gate Bouse,
39-43 Finsbury Square ,
London EC2A 1JA.
This anmuncmM appemrs as a sootier tf retard poly.
NEW ISSUE
April, 1982
KUWAIT REAL ESTATE BANK KSC.
Kmmiti Dinars ^000,000
Floating Rate Certificates of Deposit
Issue price 100 per cent
Mamgedby
VJSU l!f±.lbUlj I
Kuwait JbrdgnTrading Contracting &lnve*tirteiit Ca(SAJ0
This announcement appears as a matter of record only
June,l982
Dansk Eksportf
(Danish Export Finance Corporation)
US $175,000,000
Syndicated Credit Facility
Lead Managed by: . '
BankAmerica International Group
Privatbanken A/S
Den Danske Bank af 1871 Aktieselskab
Copenhagen Handelsbahk A/S
Faellesbanken for Danmarks
Sparekasser Aktieselskab
The Bank of Tokyo, Ltd.
The Dai-lchi Kangyo Bank, Limited
IBJ International Limited
The Mitsui Bank, Limited
National Westminster Bank Group
Privatbanken Limited
Credit Agripofe
.The Fuji Bank, Limited ‘ ; ..
The Mitsubishi Bank, Limited
Morgan Guaranty Trust Company
of New York
Wijliarns & Giyn’s Bank pJc
Managed by: '
Australia and New Zealand Banking Group
‘ Limited
The Daiwa Bank. Limited
The Nippon Credit Bank, Ltd.
The Saitama Bank, Ltd.
The Sumitomo Trust and Banking Co„ Ltd.
The Tokai Bank, Limited
The Chuo Trust and Banking Company Limited
The Kyowa Bank, Ltd.
The Rpyal Bank of Scotland pic
Sparbankernas Bank
Svenska HandeJsbanken
Union Bank of Finland Ltd
Co-Managed by:
Algemene Sp’aar-en Lijfrentekas
Caisse Generate d'Epargne et de R6traite
Associated Japanese Bank (International) Limited
Wermlandsbanken
Arab Bank for Investment and Foreign Trade
. (ARBI FT) Abu Dhabi
Uplandsbanken
Yamaichi International (Nederland) N.V.
Provided by:
Bank of America NT &SA
Credit Agricole
The Fuji Bank. Limited
International Westminster Bank PLC
The Mitsui Bank. Limited
Privatbanken Limited
Australia and New Zealand Banking Group Limited
The Danr/a Bank, Limited
The Nippon Credit Bank, Ltd. - •
The Saitama Bank. Ltd.
The Sumitomo Trust and Banking Co., Ltd.
The Tokai Bank, Limited
Algemene Spaar-en Lijfrentekas
Caisse Generate d'Epargne et de Retraile
Associated Japanese Bank (International] Limited.
Wermlandsbanken
Bank of China
London •
Bankhaus Feichtner and Co.
Aktiengesellschalt
The 8ank of Tokyo, Ltd.
The Dai-lchi Kangyo' Bank, Limited
The Industrial Bank of Japan, Limited
The Mitsubishi Bank, Limited
Morgan Guaranty Trust Company of New York
Williams & Gfyn’s Bank pic
The Chuo Trust and Banking Company Limited
The Kyowa Bank, Ltd.
The Royal Bank of Scotland pic * '
Sparbankernas Bank •
Svenska Handelsbanken
Union Bank Of Finland Ltd
Arab Bank for Investment and Foreign Trade
(ARBIFT) Abu Dhabi
Uplandsbanken
Yamaichi International (Nederland) N.V.
Banco di Santo Spirito (Luxembourg)'
Agent:
BANKofAMERICA
INTERNATIONAL LIMITED
This announcement appears as a ma tier of record only.
March 1982
SEEfe
i r>F : )x
Bank of Zambia
US$160,000,000
Oil Import Facility
Managed by:
BankAmerica International Group
Provided by:
Bank of America NT & SA.
Standard Chartered Bank PLC •>
Citibank, NA ;
Arab Banking Corporation (ABC) .
Barclays Bank international Limited ' "
GrindlaysBankpJ.c. ' '■
The Sumitomo Bank, Limited
The Chase Manhattan Bank, N A.
Bank of Credit and Commerce International
(Overseas) Limited
Agent:
BANKOFAMERICA"
Parliamentary business for
iriiiauoaf ‘ i-98E; : | s 5
lor tE&weiek
- • -v. . >
BY. DUNCAN CAWSt&L-SMrTH
\ TODAY
Commons: Debate on the crisis
in British Rail until' about 7 pm,
followed by. debate on the un-
employment crisis among young
people— both on Opposition
motion. Motions on the Depart-
jnents (No 2) (.Northern Ire-
land Order and the Films Dis-
tribution- "of Levy) — Regula-
tions.'-'
Lords: .. Oil and Gas (Enter-
p®se§ — Bill, third reading.
Deer (Amendmen) (Scotland)
■f— Bin, : Commons amendments.
Cinematograph (Amendment) —
Bill, -Committee. Short debate
on <he steps the' Government is
taJdn^ to help restore the inte-
grity of the Lebanon after
Israel's invasion.
Select 'Committees: Foreign
Affairs— Subject: Supply esti-
mates 1982-83, Class II (non-aid
votes). Witnesses: Foreign and
Commonwealth Office and Home
Office (Room 8, 4.S0 pm).
Treasury and Civil Service-
Subject: International monetary
arrangements. ' Witnesses: Bank
of En^and officials (Room 15.
A30 pm). Public Accounts —
Subject: .. Fraud, and irregu-
larities in the Property Services
Agency; private financing of
Government buildings. Wit-
nesses: Mr A. M- Alfred.
Property Services Agency
(Room ' lfi, 4:45 pm)* SociaL
Services— Subject: 1982 Public
Expenditure white paper: public,
spending on social services.
Witness: Rt. "Hon.- Norman
Fowler, MP, Secretary of State
for Social Services (Room 23,
5 iwh),
TOMORROW
Commons: i. Consideration of
Timetable Motion on. the North-
ern Ireland. Bill, followed by a
debate on- the Middle - ( EasL’.
Lords: Children's Homes Bill,
Third Reading. - .Planning. "In-
quiries (Attendance of Public)
Bill, Third Reading.. Criminal
Justice Bill, Committee. Pilotage
Commission (Additional Func-
tions) Order 1982. .motion for
approvaL
Select Committees:, Procedure
( Finance)— ^Subject: Procedure
(Finance). .Witnesses: Treasury
(Room 15. 4.15. pm). Parlia-
mentary Commissioner for- Ad-
mi nistrati on— Subject: Reports
-of the Parliamentary Commis-
sioner.. Witnesses: The Land
Registry (Room 5, 5 pro). Joint
Committee on Statutory Instru-
ments (Room 3, 4.15 pm).
WEDNESDAY.;.' ‘ Wit&eS S:; : Mr A; M. . Alfred, P$£, A
Commons:' Northern- Ireland fRoon?. T6, 4,;pni). . A L
BilL Conmuttee - : [Treasury owU CivU: S®virf\ w
Lords:- Short debate an:lwusing^b T Caiinnittee — Subject
problems, the current legsla- ' stractare of persona) income
tion on landlord and tenant; the . taxation ’* and income ; -support - .-
importance of home ownership, '^Witnesses : for department of-' •'
including - houses, in: the: owner- Health and ; SociaL Seciioty •
ship of local authorities. ’A • hffiSals . Qtoom 15, .4TL5. .pmjj L ."
second short: debate -_qn the, ^-Fmploytnenl'— Subject : : . '
problems- ; irfL civil ' d^enceT & * . of . the THeSflT -•
particular,': duties -of floral :'Safety Cotnmisaon ;and Exeat '
authorities and’ the Yaltie of the- 'tiye'i.y.'^lueyemerits. -"since- iht -■
. recruitment ■ of^yoluitteers^ De- ■ Robens .report With esser. ‘ The
bate on - the » rtpoitT '.'of ' 'the. IftesTtfi 'and' Safety- C«mh6si w -
MulfipleSderosisSoeiety oh the ;(Rgwh ! S, . :■! - .
benefits- for partial ’disability, 1 : , ; . ^ THDRSDAY; - .
Select" Comnhttecs: . ^ttiA-^ ^Consideration -
AffaiTS-^ubject: Presti^ck Arr^ Lords- amfehdmentsv'to the .
' port- Witnesses; . British. -Air- *ahd Gas - - TEntemrises) . ■
ports Authority n*ooml8,10.3Q -Mptfoni-i pa - Building- (Prf"_ -
am). Welsh Affair&-^b 3 e<T^ -ScFibed- Fees) Keputetiptis
; Soutiiiy .of Welsh Dffice Depart-:' lAirdK.-’Firpiariris BUL ;Commrt-.-. ; ''
meats. WTtnesses:»-Welsh_ Office '
economic planning group (Room- 'piaiining-:(Sc"tlandL :Bf)C Cobv " '
18,10.30 am), Home- Affairs— rmttee. ’ ; s . Sheep. ■ . - Vaxiabif..;
SubjertrHome]Dffi (^procedures/ Premitrm L fPrbfectionirf' Pax'.
for the investigation of posslble ~m'p7i^j' (Amendment) "
miScairuige.- of -' justice. . Vfit- I982; : y : “ ‘ " . ."-'■.I
nesses: . Home Office officials v. - “FRIDAY ■ - ' l '
(Room' 8,' II am).... ; ;Public Ac- - Cfrauncms: Derelict Land’. Bill.-'
iohmts-^uMec&.'vVlFVaiid-:' and , remwnJng;- 7 ;. stages. ‘ •' iairdr ’
irregularities in the- Propeny athenmnwits : to. the Soda •'
Services Agency: private ;finan<S ‘Spcflnty 'and Housing Be'nefitr' ;
.ing of Government buildings. 'BDE ; 1 ; . ' ' ‘
WEEK’S FINANCIAL DIARY
F*rr*i*W
Hklrlns P«oteco0
Jermyn Imret. - ;
The following is a record of the principal business - and
financial engagements during the week. The' board meetings are
mainl y for the purpose of considering dividends official
indications are not always available whether dividends .concerned
are interims or finals. The sub-divisions shown below are based ...
mainiy on last ywr-s timetable. st ,' '
EC.. Hatri. Nw"
of Directors. Pa» ^ al -
C S r^(5»n). Urrion Mill. MllwOridW.
Huttderrtefd YortaMre. 12JM • Q ^', r . SV * Kt WC *
W '°” M "‘- W,tneV ' B.SSfand.H.lUorshlr.' " . *'
Powell Du*rvn
Coaitortur^junf Goneril Seor
CutMdd OCtons) Rubber btna -
Earlys ot Witney. Witney Min.
pStoum’^nd Mason. Bawater House 69. C entrori rtflat EgoteS
KnloMsOrWoe. SW 1 OJD Ci*irt«r .ConsoHOlted
fcuSKffuSftcrSl. ftSa Halls. Park GEl
Lane. CrovOon 12.00 Gresham HOOM ESt*
Trtc^estlnwne. T17. Old Broad Street - Hambros
EC. 12-00 . . _ .
"bivnWND & : INTEREST PAVMtNTS r-';
Eirte an) Coidsi*ip t.3p . ' . j
E noli Hi NatSpoM In*. PKL. IjSSo-.Do. DM.
Estate^ OutW iiv*. Tsti iJe’, " •
Eucalyptus Poip - (4 llfc. . 6p ; j. ■ . v
G5roroctrtrml» -Uod' Bank; Der Oitj Spirit
■Fltftr RaM. Notes J091. 138-Sv . . ^
ScofKflnarian. rtnance B.V. StlO- Fils; Rate
' Notes .1990.- £34.82 .. r . ' ..
, THURSDAY, JUNE-24
Thai .farmers mfl. m». <Nd. . Fits. Rate.
UnUad Guarantee i -
United StatK. and Grtwel Trust •'
Dt V1DENET A INTEREST PAYMENTS-
Airtoniothre' . Prods.. ■ 2» ■ .
British lads, and •G«n-- lnySt.-T»L m ■
Bri^sTi i mis. and <Gen--.lm4t.rTau- pm' • -
East Rand ’"Cnna.. ‘ d.7Tp-. -
: EoM fttH.-B.V-- N.V. Gtd. Fln»- Rate NutrJ - .
,T9M 5345,49 - - ■ ; ,
g niuM -tdlSitea). ;■ I.SSo . v-’’.
Jantar^ IJp
. Notes rasa; S76.7B
COMPANY .MEETINGS.—' .
Boustead. , Westt ury Hotel. New ,«owt. .St.,
W - 12.1* ‘ ‘ - - r--
Erselae. Hois* InvC Winchester Ho ate.
Loodort 'Wan. eC. li-OC-. .
W'lnwey^fSwrtiej. Royal Garden Hotm.
K<-«:n«on High Streei. W, 12.00
Finals:
British Benzol CarbontsJnO
Ch ambcrta ln Pfilppa
W1 DI*MO^ND ft INTEREST -PAYMENTS —
British Siioar. ISp
City of Oxford In*. TsL. 3.75P
(IKi Wa*er Oeps. 1 2. 2U. f19F6-
19911 Zfi Coerp.1 3. 3U. 3’-] 0980-88)
3's A S and 5 ubc
H yman ti. and j.j 0.1 a
loch Kenneth Kajans Rubber. 2» .
Lone Star Inds.. 47J«5
Mu It I banco Ccmermex S.A. Ot«. Rate
Notes 19M 173J1
Parambe. 0.45o
Pfizer lac.. 46cts _
Porto Alegre Spc Gold 8«Ss- fPlan A)
fint- oow i > m>o aiipc
Renting Tin D redo log. 2p
sacs. Tat. of Scotdlanl. S-2p
Gresham H
Ham tiros
Hargreaves
tPeecheY Fro. . Deb. SHoc - -
Vearte tC. H.l. 4JS»-
Scottish Mow ..M T*».-2Jn.. ..K...
- - FRIDAY. JUNE: 25,"
COMPANY- MCflTINGS - -- . n -.- •
Aberdeen - CansYoctloe. Station flete -.
- .Aber d een- ' 12.00
• A»*cw. . gritltfi - *vo<*s- Co«naiNltt Rom ' —
TSeat Qv-pn - street. WC.-lT.M _
Royal Garden Hotel, Minerals Otta and Resource*
Win trust
Interims:
Ashdown Invests.
Ex-LantU. 25,35 -Oty Rond. SC.'- 12- DO , ^
Feedex 'Agricultural. Daisy ifUlj Burstwlck.
North -nunrbemWe. 8.00.. ■ ■ = ■ -
Gold end Bose Metal Mines. *5-M; City
.Edin bymil In». Trt.. .3 Chariptte Seeafi'-
E(tt n borflhi'12>0y i • ’• -
.--European • Ferries ’■ -Cow ir"fa "Rooms.- w . - -
. Queen Street; WC„ 1 1 4JO . -. . : ■
. Foyee o M Inset-. CenBa«jjtor Rooms Gre. ••
Coonu-yslde ProoettlM
Jackson (J. and H. BJ
Lookers ; .
Gw3'fcut EC Te^f^i, .Television Studios-
Queens: ' Cna. Aberdeen. 12 JJO
‘ Hartieeooi Water.- . 3. Lancaster - Road
Hartlepool. 12.00 . *■ ■
House of Fraser.' City . Hall, Candierigga.
Selected Risks tnvs. SA. CBrJ. 25ctS-
Wilkinson Wa» *— item 4.S6P
filklnson Wai * 'ton a.ssp
TOMORROW
COMPANY MEETINGS -
DIVIDEND ft INTEREST PAYMENTS— r
Midland Intnl. Financial Sens.. B.V. Gtd.
Fttng/ RateNote* 19 ® 5380 . 7 S -
North Atlanta Secs. Corn., Ip
Tllbory.- iy^J, MESDA Yj JUNE 23
COMPANY MEETINGS —
Advance Senrtcee. Stratton House. Stratton :
■ Ckt" van Hoteifc, Co n na u ght Rooms. Gt-
Queen St^ WC 12-TO . ■ , . .
Electronic Rentals. "Gft- Eastern Hotel.
Livermxri SL. EC. 1 TOO •
EH hi and Goldstein Barrington . House. .
Wood St. EC. 12.00
Estate Dudes In*. Tst_ Sidnnen Halt,
-t*i, Oowgro Hilt. EC 1Z.T9 -
Holt rjosephl. MHvDIe. Hosef' Barton Rd..
Strttford. Manchestw-. 12.00
Lee Valter Water. Bishops- RWe. Hatmld.-
Ooe-o Street WC. 1T.0Q - .
CaikoH BnwBoflni. Sxvlcn _ |n^ Mr.-'!.
Hotel. . presNiir- .New- Roaa -Bfackbjv . .
•• 12.00 ' ‘J'.---' '
Hall »M«»i-yvi. F-Pleg. . 161. “n, •- ,
'enfwm Corn-t Ro»d:- W.M2O0 ■ - >
H’mwN e er"3ort Tower' We
-Who. Oxford, T14I0 -t .. _
' Mste-onnlil .M»rt»r :r*^? , l“el«»J 1*R. .Cot
,.n*-rclFl - Street.. ■'.tlJKl ; ■
‘ linw rp.i." 14. SL Vincent Place. Qanr 1 '. 1 • *
. te.-oo . •u-r.-'ij—.*-
. Sr— TSL. r 1.1^ .George Snow'. - c
• (PWry. H.00' ; . "• • '
. ■ Flealsr ■ .1'
Executive : Clothea - .... .
RedWuslon '
. Wotker "and W.) .
‘ -DlYlOfrm.'Br , ' ,T *flSST PAVMENIS-. --
" Aberdeen T* ' i • :v —
n.A.RiF. APH»«r7-M * l»rt'»>t. ,PAg7
BlarV and. P" C *g r . 'T9ctS-. ■ • • ' .
■ PB.V .Di5p< • . • ■ .. '■
Glasgow. .1 2-00 . . ... . - .
Kxdk-FTt {Tyres' .sM 7 Exhausts), ‘ Groat'
Eastern Hotel. EC 1B.DO ...
LaLng Uohn). barbican Centre BarWcan,
RJUI-.J . ■ - '• _ .
Black and Edolnton. Centro. Point. IKS. Hrr-MTtH-prve 12JJ0-
New Oxford Street W. 12.00 Marine and General Mutual Ufe Asenoe.
British Borneo Petroleum Winrhntter Hse«
Britfth Northrop. Dalsvfiefd. Blackburn.
Lancashire. 12.00
British Vending, Kestrel House. Garth M..
Mor den. Surrey. 10.30
Hri prior Estate. 22-24. .. Ehr Place. EC
12.00
Cameron (J W.V Greeabank OVlces. Lion
Brewery Hartlepool. Cleveland. 12.00
Chsnner Tunnel Invs.. Winctreirer Hie..
100 Old Broad Street. EC 12.00 .
Certain. PNlsterers Hall. 1, London Wan
EC. 12-00
Firs* Charlotte A««ts Tit.. -1. Chartotte
Spoare. W. 12.30
Jove In*. Tit-. 44. Bloomsbury Spas re
W. 11.00
Lake View Inv. Tit. Winchester HoiRe
77. London Wall EC. 10.45
-MGM Hops;. Heme Road. -Worth lug-
Wnt 'SuiCtx«‘. 12.M
PrerlnclBl Ins., winchester House 10O,
Old Broad St EC. 1200 '
RJekmainworth and Uxbridge Valle* Water,
London Road. RtekmanswoNh. Hertford-
shire. 12-00 .
Swrembe Marshall and Campion.' 7
Blrchln Lane. EC. -3.30 • -
Te*>»*i Grp- 56. -Oxford. Street. Manchester;.
1200 - . _
UDS ChirehlTI Hotel. Fort man Souare.
W 12.00
W-rttnm Bros. . Fairfield Halls. Park Lane-.
Crovdon u.M
MOARO MEETINGS — .. • •?
' note
Austin (Ej
Chobb , *• ■
CocfcaodBB . i ••
Leo . Coooer, ‘Cafe. Royat Rngeot StregL_
Mefaov Docks and HaiDour.- Port ol Llvarr
-pool "Snlidfitss. - Pier , Hesd. ' 'LivernaoC -
T1JI • * •- ■ - • * •
Pqrtar LOudtnum, St- Georoea Hotel. LlfOP ■
street Llvoxioot. t 2 . 1 B
stfngsby CH.C.i. Victoria ' Hotel Bridge
Street.' BmMond. 10,30- -•
S0»*ti smffofHBHihe wartrwidtt. Head .
Office Shretxxpt* 'Street. ' Shm (ogham. .
.- T2.30 , • •
.Sumner- (Fra nctav. -winchester Houss. 77.
Londw W«H. .12,00 _ ■.
. TT .wow-jr; 1*w; . Trt: .. Mormald
■ House.’ RPifddl* Dock EC -12.00 -
Tow IrS. OiPdens Rond. -Loughbortniphi.
. • te+cesrershlr*,-. 11.30 '. *-
Tres Milan Ur and General ;1>nSA Three
< Onays. -Towec H*l| -ECi 12250 ■ ••
'• -BOARD MBET1NGS — ’
.-.•PtaBItr
Baker FsMia -
Electric and General Invests. .
EstaBes ahd Ageoort •, ■ j. ■ .
.Uovd tf. HJ
: Retfland
sapoere • ‘
Scapa . . •*.
Towtes
Triplex Foundries
.United Gas fiwusts..
-Interline: ;
• - . - ’ T V*
. .*a»o . inc. 12.5CH. . •••
' t»*p**»nmin* ' 0.01 o -,
e f nrt i sbtry Waterworks' ' J-Sf
*. .-^mi*, «~-): ,i.75oe. •• '
TR 'Natjuwil-JleWiirpw In*. -Tite.-3.SB.
TM*«a. M-wmiwM-'n Trensoort. SABttsr
liHian fikpw.. ■rt'Saa. '■
Wbessoc. •
. SATURDAY. JUNE 28 _• :
DIVinENri ft INTEREST PAYMENTS- 1 , r.’..
Heoworth. . (J ■> 0-79P
Lh Service -SJjpcPf. 2-2.75 DC- - ' Do. U -'
This announcemenl appears as a matter.ol recordbnly
Midmac
Guarantee Facility for the : : ;
Najran and Sharorah Housing Project
in the Kingdom of Saudi Arabia -
Guaranteed by *
Midmac Holding Corporation
and . *'
Midmac S.A.R.L.
Arranged by
BankAmerica International Group
Issued by
Banque Nationale de Paris
Provided by
Bank of America NT & SA
Al-Bank Al-Saudi Al-Fransi ..
(The Saudi French Bank )
Banque Arabe et Internationale d’lnvestissement (BALL)
BanqueNationale'de Paris . . .
Banque de Pari_s et des Pays-B.as '
(Bahrain Offshore Branch) . - -
Saudi International Bank . . .
(AI-Bank AI -Saudi Al-Alami Limited) . " ;1 ' J '.'
The Gulf Bank K.S.C. (Kuwait) . ■ ' .
First City National Bank of Houston^
Texas Commerce Bank.NA-
Agent
BANKofAMERICA
INTERNATIONAL limited
- r - ■ * •
ek
\
Financial Times Monday June 21 19S2
Companies and Markets
17
INTERNATIONAL CAPITAL MARKETS
-Or-*"
TP.
'">n.
v ' Ubi/ - %
r : ^s’- r
/*• P-vV.,
■ -! 2 .. fllji • 1
rn-
-i~ Ha-V 1 '
• IS ip
- :• T ■-
" ‘
: H, ,*Du «*'■
■i'v; sjr-
V-.JJ 1 few
L«r*. ■
•
.. JJlIUv
INTERNATIONAL BONDS
A change in psychology
»*Y
•i.„ ,
11 >n.
% iiv-
■n-r
7 5*.
■ rV.->
■- '!"“. C *-p5-, '
'Sr.-..- --*
.7
'I
•il'JS’-
T* - — "I* ■
- 't
.. " \
!•>’ ' 1 - "
■• _ ;
).
LAST WEEK’S dramatic Tins,
.irt short-term interest rates has-
-ied to a major change in the-
..psychology of the international
bond market which is aiffer-
ing an across-the-board seH-off
-rivalling the problem o£ last
year.
Eurocurrency deposit rates
- tell ' the story ; -the six-m ana
Eurodollar level nudged above
16" per cent oh Friday, a one
percentage point increase on
the week. The Euro D-mark rate
•- ren^ns 9 per cent and Herr
. Karl Otto. Poehl, president of
the Bundesbank, is said to have
; told the. West German cabinet
he sees lithe scope for a further
reduction in European interest
rates this year.
In Switzerland, where short-
term deposit rates moved up by
{ to f of a point. last week, the
six-month deposit rate increased
. by more than one to close at
-6$ per cent •
In the slumpiiig Eurodollar
bond, market, prices were down
by almost three points on the
weejs. Euro D-raark bond
prices fell by nearly two points
on - average and Swiss franc
foreign bond prices had
declined li point by Friday.
■* ..The shakeout, now dose to a
month did, is possibly more
serious than the one which
occurred last year. More paper
" is being unloaded by dealers
and there is no sign whatsoever
of encouraging news from the
US-
All this suggests- that the dire
predictions of Dr Henry Kauf-
man of Solomon Brothers are
1 coining true. An increasing
number of Eurobankers are tak-
ing the view that higher interest -
rates are here, to stay. This is
paralysing the Eurobond mar-
ket,. already burdened by a sur-
plus of new issues.
What precisely is happening?
Firstly,- it seems that the real-
Tsatitra of a $lO0bn US. budget
deficit has sunk in and is caus-
ing huge worries about the U_S.
Treasury’s finance of it.
. Secondly, ILS. corporations,
-already pressed by the reces-
sion, are finding the. pressure
on cash flow difficult to bear.
Massive, corporate borrowings of
short-term money are in turn af-
fecting short-term dollar in-
terest rates.
This, in turn, is upsetting the
International bund market. The
16 £ per cent rate reached on
Friday on Eurodollar six-month
de-post.it money warrants was a
level few bankers expected to
see 90 suddenly.
As the interest rates have
firmed, the U.S. .dollar’s- overall
exchange rate has soared to its
Highest level in 12 years. j?he .
17*,
16 *!
I5\r—
MX*—
“t
6-MONTH
EURODOLLAR
xy
US. FEDERAL FUNDS
8 910T1T4-B-I8J7 1S
JUNE 1982 ■
US CORPORATE FINANCE
Equity for debt craze catches on
dottar/D-mark exchange rate
closed at DM 2.48 on Friday
against. DM 2.38 a week before.
The dollar/Swiss franc rate was
SwFr 2.12 compared to
SwFr 2.04.
The strength in the US. dol-
lar has led to two trends: it has
tempted some non-dollar based
Investors to cash in their chips
and realise an exchange gain
and it has acted as a disincen-
tive for non-dollar based in-
vestors to invest in Eurodollar
bonds.
Given the current interest
rate picture, a number of invest
tors are shifti ng from Euro-
bonds to term deposits. It makes
sense to do this because the
returns are simply more attrac-’
tive.
The only way out of this
conundrum, say most Euro-
bankers, would ' be some
astonishingly good news from
the U.S. side of the Atlantic. But
the UJ5. cavalry has not arrived.
Dr Kaufman’s words on Friday
spell out a depressing scenario:
“The spectre of the Treasury’s
enormous demands for credit in
the second half of this year is
drawing ever closer.”
In tiie Eurobond market, only
a few brave souls dared to
launch new issues last week.
Morgan Stanley succeeded with
a $200m floating rate note issue
for the Bank of Nova Scotia.
It found itself pushing hard,
however, with its $50m five-year
straight bond for Ohio Edison.
The original coupon indication
was 16$ per cent, a price which
was realistic when announced.
By Friday, however. Morgan
Stanley was no longer talking
about 16} per cent; it faced the
project of substantially im-
proving the terms. ■
S. G. Warburg launched a
$50m to 875m seven-year issue
for Britain’s Finance for Indus-
try fFEI} with a 15} per cent
coupon at par. On Friday the
Pap*r was changing hands at
96} to 96} and not much more
than a third of the issue was
said to have been placed.
In the West German market
high dollar rates and the
weakened D-mark caused new
issues to trade at discounts of
as much as 3 per cent. The
average yield of 782 outstanding
Euro D-mark bond issues stood
at .9.75 per cent on Friday,
against less tban 9.50 per cent
a fortnight ago. The market was
closed on Thursday for a
national holiday.-
In the currency-sensitive
Swiss franc foreign bond
market the party is over— the
strong U.S. dollar and increased
local interest rates are proving
«* match for the market.
. As this week begins th? ques-
tion on every Eurobond
trader’s tongue must be: “ How
can I keep my head down and
avoid more losses ? This is
not the worst shakeout the
Euromarket has seen, but it is
certainly proving a painful one.
Alan Friedman
A NEW craze — swapping
equity for debt — ■ is sweeping
through America’s boardrooms.
Investment bankers claim that
it’s one of the smartest financial
manoeuvres that a company can
make in present conditions. But
to an outsider, the transactions
in most cases look more tike a
waste of time and^ money .
Salomon Brothers pioneered
the idea last August when it
arranged for Quaker Oats to
swap new shares for some of its
outstanding corporate . bonds.
Since then, there have been
more than 100 such transactions,
and the face value of the debt
retired by them amounts to
about $7bn.
All sorts of businesses have
been involved — including banks,
steelmakers, utilities and con-
sumer goods specialists — and
over 65m new shares have been
issued in swap deals.
Salomon has been by. far the
most active banker in the field,
with some 37 transactions under
its belt. Next comes Goldman
Sachs, with about a score and
Morgan third with, roughly a
dozen.
In a typical ' swap, an invest-
ment bank buys through the
market an agreed amount of a
company’s debt. Because of the
way interest rates have moved
in recent years, it will be able
to do this at a substantial dis-
count to the face value. The
company then issues enough
new shares to the investment
bank ro pay for the bonds, pric-
ing the shares at a discount of
perhaps 3 per cent to S$ per
cent on the market price as a
sort of underwriting fee. The
bank then sells the shares off
to its investment clients.
If the company bought the
bonds itself, it would' be faced
with a tax liability on the differ-
ence between its purchase price
and the face value — its book
keeping profit on the trans-
action.
The Internal Revenue Ser-
vice has not yet ruled formally
on stock for debt swaps, but The
Street is convinced that, pro-
vided the investment bank acts
as a principal in the deal, there
should be no tax liability. That
means the bank is at risk when
it is selling the new shares —
but only to movements in the
market as a whole. The new
shares are not priced until after
details of the transaction axe
announced, so that investors are
not taken by surprise when the
new shares are offered for sale.
As a result, the company gets
a tax-free extraordinary' profit,
which is handy when business
conditions are as tough as they
are today. The company also
bolsters its balance sheet by re-
ducing the debt and increasing
the proportion of equity. If tKat
sounds too good to be true, it is.
Long-term debt costing 6 per
cent or 7 per cent be/ore tax is
enormously attractive to a bor-
rower at a time when Unde Sam
is having to pay well over 13
per cent for new money. From
the point of view of an existing
shareholder, it is something that
a company should hang on to for
as long as possible. To swap it
for equity at a time when shares
are yielding around 7 per cent
(on dividends paid from after
tax profits) makes little sense.
Take U-S. Steel as an example.
Its shares now stand at less than
one-third of book, value, and not
much .more than half their 12-
month high. Yet it was prepared
to issue 5m new shares — worth
nearly SlOOm — at a 'discount to
a very depressed market price
the other week. The proceeds
were used to pay off debt, some
of which was not due until 2001
and none of which cost more
than 7J per cent. For existing
shareholders that represents a
significant measure of dilution.
Of course it will be able to
report a profit on the deal —
perhaps as much as SSOin or so.
But this will be really no more
tban an accounting item. The
company has merely exchanged
the benefits of long-term cheap
money — -which would have bol-
stered earnings in future years
— in return for a one-off gain in
the current year.
There are circumstances in
which such transaction might
be justified, some of which
might apply to U.S. Steel.” For
instance, the borrower may be
facing sinking fund obligations
which have to be met one way
or another. It may not be paying
much corporation tax, which
would mean that its debt is cost-
ing roughly the same both
before and after tax. It may
believe that its shares are ridi-
culously over-priced, or that
there is no scope for payin?
higher dividends in future
years.
But apart, from such rather
.special cases, it is hard to see
how anyone benefits from swap-
ping expensive equity for cheap
debt — apart from the invest-
ment bankers.
Richard Lambert
CREDITS
Argentine debt re-scheduling seen as inevitable
THE RELIEF of Port Stanley-
offered little parallel relief to
the beleaguered Eurocredit
markets last week as inter-
national bankers accepted that
the British freeze on Argentine
assets is to continue as long as
there is no formal cessation of
ail hostilities in the South
Atlantic.
For British banks this meant
there was no immediate rea-
son for a let-up in their efforts
to persuade their foreign
countreparts to share out in-
terest payments received from
Argentina. The volume of
shared payments is growing,
but there are a number of in-
stitutions, notably in Japan and
France which are holding back.
Foe Argentina it meant that
the financial stranglehold im-
plied in .the sanctions, would
grow gradually tighter at a
time when foreign debt ser-
vicing is already stretching the
country’s financial resources.
Even after the assets freeze
is lifted most- bankers generally
agree that Argentina will have
difficulty in obtaining medium-
term credit Concern has
switched from the immediate
Falkland’s problem to the in-
tense political and economic
instability in Buenos Aires.
As a result, a rescheduling
seems inevitable to many inter-
national bankers, though most
also say that ibis need not be
as harrowing and dramatic a
process as that seen in Poland.
Argentina’s food surplus and
energy, self-sufficiency give the
country a fundamental economic
strength that could lead to a
smooth rescheduling' provided
talks can begin in time. The
result would be more a re-
structuring of bank debt,
rather, than a long-drawn out
rescheduling covering bond
issues and official credits.
But this relatively optimistic
scenario is still not enough to
lift the gloom on lending to the
Latin' American continent
generally. Feats that political
political destabilisation could
spread to other countries per-
sist. and the latest rise in Euro-
dollar interest rates will have
added considerably to an
already severe burden of debt
sendee in most countries of the
regipn.
Mexico’s latest $2.5bn Euro-
credit has elicited only about
$3 50m in syndication despite
three extensions of the sub-
scription period.
The extensions have delayed
the signing of the credit and
the $lbn bridging facility pro-
vided by some of the lead man-
agers has therefore been ex-
tended for about 10 days to
July 7. Meanwhile, Mexican
public sector agencies con-
tinue to borrow heavily at very
short term,
Mexico’s borrowing require-
ments — a gross need of $25bn
to $28bn is forecast this year
— are so large that it will have
to return to the market fairly
shortly, but bankers expect a
slight pause to analyse the
current situation.
Similarly Venezuela, which
failed to agree with its bankers
on terms for a jumbo syndi-
cated credit earlier this month,
is continuing with short-term
borrowing by public-sector
agencies. Transactions reported
in the market include a 8315m,
one-year loan for the develop-
ment agency Corporation
Venezolana de Fomento and a
$3 10m short-term loan for the
water authority 1NOS.
Peter Montagnon
CURRENT INTERNATIONAL BOND ISSUES
Borrowers
Amount,
m.
•t
Maturity
Av. life
year*
Coupon
Price
Lead manager -
Offer yield
%
Borrowers •
-Amount
m.
Maturity
Av. fife
years
Coupon
Price
Lead manager
Offer yield
%
US. DOLLARS . .
- .
4 .
Kansai Electric**^
100
1987
..
61
100
UBS
L5Q0
FFIt
75
1989
7 .
151
100
SG Warburg
15250
' Achilles Corp.**§+
30
1987
6*
100
UBS
6300
Bk. of Nova Scotiaff
200
• 1994
12
100
Morgan Stanley
Nippon Carbon**§
35
1987
•L—
V
100
CS
a
Ohio Edison
50
1987
5
. *
•
Morgan Stanley
*
Hilti AG**t
35
1987
—
6}
100
cs
6.750
ECSCt
30
1987
4J
Mi
*9i
European Bnkg. Co.
- 14.961-
GUILDERS
CANADIAN DOLLARS
lADBt
100
1992
10
is?
99
ABN, Amro Bank
10.919
Gas Metropolitan^
20 ”
1990
8
171
\ 99J
Wood Gundy
17.430
OKB**t
75
1987
5
100
Amro Bank
10.500
D-MARKS
Canon *•§+
jiA
T
61
' 100 •
Bayr. Landesblo,
KUWAITI DINARS
OKB
7
1987
5.
122
a
KFTCIC, K1IC, KIC
•
w
1™
7
YEN
Nikko Secs.
. ’ . .L250
Nordic Invest. Bank!
■ lObn .
1992
9
8.4
99.45
Daiwa Sees.
8-663
SWISS FRANCS
ECUs '
BNPt
100
1992
—
7 3
99
UBS
6J892
EIB
40
1989
6
• 13J
*
Kredietbank Inti.. Sac.
Sears Roebuck**!
200
1988
—
100
UBS
. 6500
Gen. de Banque
•
* Not yet pHcad. * Fowl tflmta. '** Placement..
• Minimum, f Convertible Note: Yields or* calcu latod on AIBD basis.
30
This advertisement complies with fh&reqviremenfs of the Council of The Slock Exchange
of the United JBngdontaadtheSepubiic of Inland. • .
Finance for Industry International B.V.
{Incorporated in The Netherlands with limited liability) .
Issueofuptp
U.S. $23,000,000
131 per cent. Guaranteed Notes 1989
■ i . . . > '•
rao cnd it iapallyand^ graamte c d lgr '. .
Finance for Industry pic
(fitcorporatedinEnglandmder Hie Companies Acts 1948 to 2967)
Q f W fijr-T. TT S-SKO.QOO.QOO are being issued as th e Ini t ial Traacfrs at an
Issue Price of 100 per cent
AG. Warburg & Co. McL
BanquedeParisetdesPays-Bas BardaysMercbant Bank Limited
County Bank limited ' . tBJ.tutemational Limited
Lloyds Baric In ter national Limited Merrill Lynch International & Co.
Samuel Montagu & Co. Limited NomuiaMtemaiional Limited
IHe Koyal Bank o£ Scotland pic Salomon Brothers international
WestdeutsciieliaiidesbaiikGirozeiitiale _
hdngdneoiilstlaly,!? 33 .
Heron House,
515-325 High HoJbom, -
Xandan WC1V 3KB. ;
Zb tJary T 9S2.
Tots announcement tippeers as e matter of record only.
HEW ISSUE
April, 2982
-"T; "Tfc'
THE INDUSTRIAL BANK OF KUWAIT KS.C.
Kuwaiti Dinars 700Q000
10 per cent Bonds di tel987
Issue price 93 & per cent
Kuwait Foreign Trading Contracting & Investment Co. (S.A.K.)
AJahli Bank of Kuwait K.S.C. Kuwait
Kuwait International Investment Co. s.auk.
The National Bank of Kuwait S. A.K.
Burgan Bank S. A.K.
The Commercial Bank of Kuwait S.A.K.
The Gulf Bank K. S. C
Kuwait Real Estate Bank K.S. C,
The Bank of Kuwait and The Middle Hast K.S. C.
Kuwait Investment Company S.A.IC
Arab Trust Company K.S.G
Credit Lyonnais
IS
and Markets
Financial Times Monday June 21 19 s
international capital markets and companies
•r * -*
i~ - l
* }
tl
U.S. BONDS
Rise in prime rate
expected soon
EVERYTHING IS pointing to-
wards an imminent rise in the
U.S. prime rate, perhaps as early
as this week. The prime at most
major U.S. commercial banks has
stood at 16 } per cent since
February 23, but the market
now expects it to increase to
about 17 per cent reflecting the
sudden spurt in U.S. interest
rates in recent days.
It is ironic that interest rates
should be accelerating again at
a time when the market gener-
ally recognises that the Fed has
been adopting a relatively
-tolerant approach to monetary
growth. After months of agonis-
; ing over the Fed’s tight squeeze
on money. Wall Street was
hoping for some relief on the
interest rates front.
But for a variety of technical
-and psychological reasons this
has simply not happened. The
impact of a more accommodat-
ing Fed has been wiped out it
U.S. INTEREST RATES (*'.)
Week to Weak hi
June 18 June 11
Fed. funds wMy. av. 14.38 13 SI
' 3-moiWh Treas. Mis. .2212.67 U.91
- 3 -month CD 15.00 13.80
30-year Treas. bonds 14.19 13.63
AAA Uril 16.13 16.00
In the week to June 9 Ml rose S1.*bn
AA Industrial 15.63 15.50
Source: Salomon Brothers (estimates],
to S454.2bn.
seems by the strong seasonal
loan demand exacerbated by the
continuing ripple effects of the
Drysdale affair.
These factors, and not any
-tightening on the part of the
Fed. kept the Fed funds rate
up in the 14 per cent range
all last week compared to 13}
per cent the week before.
Indeed, the Fed did intervene
in the overnight market with
system repurchase orders which
. supply reserves to the market
and should normally bring the
.funds rate down. But despite
: the Fed’s long awaited action.
Fed funds continued to trade at
a disappointing mid 14 per cent
level.
Because of the heavy loan
demand banks have been
borrowing in the overnight
market Moreover, an increas-
ing number of dealer banks
have turned to the Fed funds
market in the wake of the
Drysdale fiasco instead of
borrowing through loans using
Treasury securities as collateral.
Bv the end of last week, the
Treasury 14 per cent 30-year
long bond was down at 9S. from
as much as 107 barely over a
month ago. As for corporate
bond yields, they rose almost
50 basis points during the- past
week. The Treasury’s latest
two-year notes auction last
Wednesday was a disaster with
little retail demand either from
domestic or foreign buyers.
The market does not expect
the situation to improve until
Fed funds come down to around
13 per cent. While this could
sd.Il happen if the Fed main-
tains its tolerant approach to
monetary policy, the market is
beginning to become nervous
that substantial growth in M-l
next month could reduce the
Fed's flexibility in coming
weeks.
Indeed, the Fed is again
under attack from the Adminis-
tration with the Treasury
apparently conducting a major
review of monetary policy.
Frustrated by the state of
shambles in the credit market,
the Treasury is apparently con-
sidering ways of restricting the
independence of the Fed. The
move appears to reflect the
Administration's dismay for the
failure so far of its economic
recovery programme to appease
the credit market and a desire
to turn the Fed into a scape-
goat.
In recent weeks, the Fed has
indicated it was no longer &o
preoccupied by the fact that
Ml has been growing above its
annual target. Until the end of
this week, the market has been
expecting the Fed to continue to
tolerate Ml's deviation from
the target and made no change
in its market intervention policy
when the Federal open-market
committee meets next month.
On the other hand. Mr Paul
Volcker. the Fed chairman,
emphasised in his testimony on
Capitol Hill last week : “ It
would be shortsighted for the
Federal Reserve to abandon a
strong sense of discipline in
monetary policy in an attempt
to bring down interest rates."
At the same time, the market
is likely to face pressure from
another angle in coming weeks.
Already there is growing evi-
dence that the U.S. economy is
poised for recovery — albeit
a recovery of modest propor-
tions.
The combination of all these
factors is doing little to lift the
market's depressed spirits.
After all. the Treasury’s record
$96bn in credit demands for
the second half of the year is
now literally on the market’s
doorstep. p au | Betts
Mesa abandons battle with
Gulf for Cities Service
BT PAUL BETTS IN NEW YORK
GULF OIL has come a big step
closer to acquiring Cities Ser-
vice, the 20th largest U.S. oil
company, with the decision by
Mesa Petroleum to drop its
rival bid.
Mesa said it will sell to Cities
Service for $225 m the 5 per
cent stake in Cities Service it
had accumulated in the past IS
months.
The companies will drop all
litigation and end the takeover
bids each had made for the
other during a bitter battle.
Cities Service accepted last
Thursday an offer of $63 a share
in cash and securities from Gulf.
Mesa has apparently decided'
it was fruitless to counter the
Sobn offer from Gulf which is
the U.S.’s sixth largest oil com-
pany.
Under peace terms spelt out
in a joint statement Mesa has
agreed that in the next five
years it will not buy any Cities
Service shares or seek to in-
fluence the affairs of the rival
company as long as Cities Ser-
vice “does not take any such
action with respect to Mesa."
Mesa is not walking away
empty handed. It will make a
tidy profit of $44m before tax
from the sale of its 4.1m Cities
Service .shares to Cities Ser-
vice. Cities Service wilL pay
Mesa $55 a share for the stock
Mesa bad acquired at an average
price of $44.25.
The $55 a share price was
a compromise between Mesa’s
average purchase price and
Gulfs $63 a share offer.
The agreement between Cities
Sendee and Mesa removes the
major obstacle to Gulfs bid.
The only real one left could
come from U.S. anti-trust autho-
rities. But although in the past
a merger between two major oil
companies would, have been
unthinkable, Washington is
currently adopting a far more
tolerant attitude:
Nevertheless, Gulf has
acknowledged that the merger
could raise some anti-trust
objections in certain petrol
retailing markets in ope or two
states, it would be able to get
round these problems by divest-
ing any troublesome down-
stream assets it acquires. This
would not worry Gulf, whose
prime purpose Is to buy Cities
Services producing oil and gas
assets the company’s sub-
stantial undeveloped acreage in
the U.S. ■■ ••
Another -possible obstacle,
could still come from a rival
bid by a major oil company.
But this is regarded as unlikely
since Gulf is already payout a
generous price and another
major oil company would have
to come in with a hostile offer
which would stand far less
chance of success than a
friendly bid.
Although some analysts con-
sider Gulfs offer high, the
company's move reflects ‘ Gulf's
urgenr longer-term needs '.to
replace • and increase its
domestic U.S.- - oil and • gas
reserves. Moreover, . several
analysts say Gulf Is paying, a.
good price for a company with
a break-up value currently put
at between $90 and $100 a share.
Advance in
earnings at
KemaNobel
- By OUr Nordic Editor in
Stockholm
KEMANOBEL, the Swedish
chemicals, group achieved earn-
ings of about SKr 80m ($13.3m)
in the first four -months of' the
year, an increase of about
SKr 50m over the corresponding
period of -2.981- ' Consolidated
earnings for the whole of 1981
were only SKr 50.8m:
Sales advanced by about
SKr 200m to SKr 114bn: The'
company expects to maintain the
rate of improvement -in -profit
performance through the rest
of the year. .'
■ The market J. for petro-
chemicals .is' still” characterised
by over-supply and low prices,
KemaNobel says. Its profit
recovery, which, contrasts with
the continuing downward
plunge in most other European
plastics apd . chemicals com-
panies, . k , attributed io last
year’s adjustment of output to
demand. .
' . Other group' operations —
adhesives, resins, consumer pro-
ducts and bleaching chemicals —
have continued to: perform well.
Pkbanken profits up
59% at four months
la* year o S rhf ^unusually bits
four months ,s “JJ essed oP .-r-
because of ,tj|* * cp for Swedish
a ting conditions tor iggi.
lank* at ite ^ ^
PKbanken does not t ~^ nmc
increase profits at
rate during the rest of
tat is forecasting tor Wg- * *
a whole a- rise of some -U
cent on last years bKr Siam.
PKbanken group [h ;,
SKr 113 tn to SKr 313m
PKBANKEN, Sweden’s stale-
owned commercial bank, raised
profits by SKr 102m, or by 59
pea: cent, to SKr 274m ($45.6m J
in the first four months of 1982
compared with the correspond-
ing period of 1981.
Income- climbed by 24 per
cent to SKr 832m while , costs
rose by 12 per cent to
SKr 558m. Included in the costs
are credit, losses of SKr 30m
and unrealised losses of SKr 9m
on foreign currencies, which .
are related to UJS. dollar loans
raised for the. bank’s invest-
ments abroad. v
four-months with the
iary in Luxembourg showin-
the largest improvement.
Euro-Clear refunds fees
EURO-CLEAR, the Brussels-
based international bond clear-
ing system, is refunding
US$1. 4m. of clearance and
delivery fees- to its 2,200
institutional members, -Alan
Friedman reports.
■ The refund covers all fees
paid in the six months to May
31. Mr Ian Speers, chairman of
Euro-Clear, said the decision re-
flected “ the most active period
ever in both the primary a ™ 1
secondary markets for J* 1 **
nationally traded securities and
other favourable factors.
Euro-dear's turnover or
*23S^bn for December Iasi year
to May was 144 per cent higher
than a year earlier.
INTERNATIONAL APPOINTMENTS
European
Investment
Bank posts
_ The Board of Governors of
the EUROPEAN INVESTMENT
BANK, consisting ol one Minister
from each of the ten member
states of the European Com-
munity, has appointed the bank's
new management committee
— the EIB's president ana five
vice-presidents — for the next
statutory six-year term of office.
The management committee is
the full time “motor” of the
bank, controlling all current
operations, recommending deci-
sions to the directors and then
carrying responsibility for their
implementation. The president
presides at meetings of the
board of directors.
The composition of the com-
mittee is now as follows: presi-
dent, Mr Yves Le Portz (appoint-
ment renewed, French): vice-
presidents. Mr Horst-Otto Steffe
( appointment renewed, German );
Mr C. Richard Ross (appoint-
ment renewed. British); Mr Aric
Pais (new appointment. Dutch):
Mr Luclo Izzolnew appointment.
Italian): and Mr Noel Whelan
(new appointment. Irish). Two
vice-presidents who did not seek
re-appointment have retired: Mr
Giorgio Bombassei Frascani de
Yettor (Italian) and Mr Maori ts
Esselens (Belgian).
Mr Pierre Werner; Prime
Minister, Minister of State and
Governor for Luxembourg, takes
over chairmanship of the bank’s
board of governors until the 1983
annual meeting. Mr Corneille
Bruck, President-Directeur of
the Caisse d'Epargne, Luxem-
bourg,' was appointed chairman
of the bank's Audit Committee.
• Mr John Heywood will be
retiring as a managing director
of JAR DINE MA THE SON AND
CO„ on July 9. His responsibili-
ties for the international
operations of the Jardine
Matties on Group will be taken
over by Mr Simon Keswick -who
will be appointed a managing
director of the company from
July 10. Mr Keswick joined the
company in 1962.
• Mr Brian Evans has been
appointed a director of ROLLS-
ROYCE (INDIA). He also
becomes general manager, based
in New Delhi and succeeds Mr
A. M. (Max) Scott, who has
retired. He was commercial
executive-international collabora-
tion.
• Mr George F. Knapp has been
appointed director of market and
product management for tele-
communications and electronics
at ITT Europe in Brussels. Mr
Knapp was elected a vice-presi-
dent of ITT in 1976.
• Mr Charles S. Sanford Jr. will
become president of BANKERS
TRUST COMPANY apon the.
retirement of Mr John. W. ,
Hannon Jr. at the end of this
Mr Charles S. Sandford Jr
year. Mr Sanford, who is
currently executive ’vice,
president in charge of resources
management and a member of
the bank's management com-
mittee,. will also succeed Mr
Hannon as president of Bankers
Trust New York Corp., the
bank's parent company. The
appointments take effect on
January I 1983. Together with
Mr Edward A. Lesser, executive
vice president in charge of
fiduciary and a member of the-
bank's management committee,
Mr Sanford has been elected a
. director of the. bank and the
•- Hr David Elyan, secretary of
AGB Research. Mr Frits Becht,
managing director of AGB
Netherlands and Mr Maarten Hart-
sniker, joint managing director
of In tom art. have been appointed
to the board of ASP&MAR. Miss
Christine ElUnger, formerly com-
mercial manager- of Gfk-Belgium,
has 'been appointed ' general
manager.
• Mr Harrison L. Townes has
been appointed president, chief
executive officer and chairman of
the board of the recently formed
TOKLAN OIL CORPORATION.
In 1981 Harrison. L. Townes was
acquired by Par Investment Cor-
poration. Out of this merger
was bom Toklan Oil Corporation.
• Hr Howard A. Knight has been
appointed managing director of
WEEKS PETROLEUM, West-
port Conn.
• Mr Chris Teweli has been
appointed as a director in New
York of MORGAN GRENFELL
INC. His principal role is to
establish and develop a lease
packaging capability in the U.S.
market
• Mr W. A. Rogers has been
appointed to the newly-created
corporate position of director of
product research- and develop-
ment for the DOW CHEMICAL
’• COMPANY. He has been serving
. for the past two years as director
of division research and develop-
ment for Dow Chemical USA in
Midland. Michigan.
• FRITZSCHE DODGE AND
OLCOTT INC, has- appointed MJr
Mr Hans Van Essen
Maim Van j Essen as vice
pres idem — fragrance develop-
ment and chief perfumer. Mr
Van Essen has extensive experi-
ence in the worldwide fragrance
industry, having been* employed
most recently by Firmenicb Inc.
and Roure ' Bertrand Dupont.
• INTERNATIONAL THOMSON
ORGANISATION, Toronto, has
made .. die following appoint-
ments: Mr T. L. Cross, chairman
and chief, executive officer of
Warren, Gorham and Lamoat,
Inc. joins the board of Inter-
national Thomson Holdings Inc.
the principal U.S. holding com-
pany of International Thomson
Organisation Limited. Mr J. F.
Leisy, chairman of Wadsworth
Inc, is appointed deputy chair-
man of .International Thomson
Organisation Inc. Mr R. S. Smith,
chairman and chief executive
officer of Callaghan and Co, Mr
D. R. Waraken, president and
chief executive officer of
Wadsworth, Inc, and Mr J. A. S.
rail, - vice-president, chief
financial officer and secretary of
International Thomson Holdings
Inc. join the board of Inter-
national Thomson Organisation
Inc. International Thomson
Organisation Ine is the .holding
company for International Thom-
son's U.S. information and pub-
lishing interests.
• The ROYAL BANK OF SCOT-
LAND has appointed Mr Leslie A.
Haig, at present manager (inter-
national) at the • bank's head
■ office in Edinburgh, as senior
representative at its Houston
representative office in Texas,
from July I.
• Mr Achtm .Weers has been
appointed managing director nf
.MoDoCell AG. Wiesbaden. Ho
is at present head of pulp sales
at G. SchUrfeldt and Co., Ham-
burg. Mr F. K. von Hutten has
been appointed deputy managing
director of MoDoCell, Wies-
baden.
SERHN
U.S. $40,000,000
BRNCR 5ERFIN, S.R.
Subordinated Floating Rate SerialNotes
Due 1985-1989
Banco de Bilbao SA. ■
Bank of America International Limited
Barque Nationale de Paris
Chemical Bank International Group
Credit Lyonnais
Samuel Montagu* Co. Limited
Morgan Guaranty Ltd
Banco de Bogota
Bankers Trust International Limited
Barclays Bank Group
Continental Illinois Limited
. Manufacturers Hanover Limited
Junel8tl982
All of these Seated'*' hate been sold. This announcement appears os a matter of record wifw
FT INTERNATIONAL BOND SERVICE
U.S. DOLLAR
STRAIGHTS
Aetna Ufa 15 86/97 ...
Amax Int. Fin. 16V 92 75
Amex O/S Fin. 14A. 89 75
APS Fin. Co. 16V 89 ... .76
ATT 74V 89 400
Baku- Int. Fin. 0.0 92 225
BHP Finance 14*, 89 ... ISO
Bk. Amir. NT SA 12 87 200
Bk Montreal 14*, 87 ... 100
Bqua. Indo Suez 15 -89 100
British Col. Hyd. 14V 89 200
Burroughs Int. 15*« 88 50
Cansdsir 15*, 87 . v ...
Canadian Pac. 14V ^82
12S
160
750
75
Carolina Power 18*, 89 ' 80
CISC 16 87 ... "WO
Citicorp O/S 15 84/92 100
Citicorp O/S 15*, 86/87 125
CNA 15*, 97 TS
Con. Illinois 15*, 39 ... 100.
Duke Pwr. O/S 15*, 89 60
Duoont O/S. Cep. 0.0.90 300
ECSC 14* 87 50
EIB 15V 89 ISO
Eksportfinsns 14*, 89 ... 50
Gen. Elec. Credit 0.0 92 400
Gen. Elec. Credit 0 0 93 .400
Getty Oil Int. H 89
GMAC O/S Fin. 16 88
GMAC O/S 15*, 85/97 100
GMAC O/S Rn. 15 89 125
GMAC O/S fin. 15 87 10 O
Gulf Canada Ltd 144, 92 100
Guil Oil 14*1, 94
Gulf Oil fin. 0.0 92 ...
Guff Sane- O/S 16 90
Int-Am. Dv. Bk. 15V 87
Japan Do*.' Bk. 15*, 87
Nsw Brunswick 16*, 89
Ontario Hydro 14V 89...
Pac. Gas A Q. 15*, 88
Pac. Gas & B. 15V 89
J C. Pannay Gf. Oft 94
Phillips Petrol 14 89 ...
R.J. Rynldi. O/S 0.0 92 400
Saskatchewan 16 89 ...
Shaft Canada 14* 82 ...
Soain 15*. 87
Superior O/S fin. 14 89
Swed. Exp. Cr. 15V 89
Swed. Exp. Cr. 14V 90. 100
Swed. Exp. Cr. 0.0 94 200
Union Carbide 14V 89 150
Wells Fargo I. F. 15 87 75
World Bank 15V 88 ... ZSD
Change on
lasuad Bid Offer day week Yield
150 99 V 99 V - 0 *a -IS 15.17
97 *. 98 S “IS - 3 V 16.61
94 S S 4 V -OS -ZS 15.61
38 S 99 -IS - 2 VWS 0
99 V 100 V -OS -IV 14.21
tZ 4 S 25 -OS -IS 16.51
96 - 95 S- 0 S - 2 S 15 J 1
89 S SB* - 0 V ~ 1 S 15.15
96 S 9 *S -OS —OY 15.58
9 SS 98 S -OV -IS 16.01
STS 97 S —OS -—IS 16 X 7
99 V WO*, -OS -1 15.72
98 *. 90 S -OS -IS 15.71
85 98 S— OS —IS 15 X 9
1 Q 0 S 100 S -OS -IS 16 X 3
99 V 99 V -OS -IS 16.09
98 V 9 SV -OV -IS 16 X 7
99 *, 99 V -OS -OV 15 - 88 "
. 96 96 *, - 1 », — 3 S 16 X 2
99 S 100 .-OS -IV 15.75
96 S 96 -2 - 3 VW.S 4
33 V 33 V -OV -IS 16 X 7
95 V 9 SS -IV - 3 S 16.07
98 V 98 V -OS -IS 15 X 2
84 *. 95 S -OS -IV 15.88
25 S 26 S- 0 S - 1 S 1 S 4 W
22 *. 23 S + 0 S “IS 14.72
35 V 96 —OS —IS 15.01
98 V 98 S “IS -*S 16 X 9
97 V 97 V -OS -IS 16 X 5
96 V . 96 *, -OV -OS 15 X 8
96 V 97 V -OS — OV 15 X 0
95 SSS -IV— *S 15 Xl
176
87 V
97 V -CP, -7 14.70
300
25 V
25 *. -OV -IV 15.06
60
96 V
96 V -OV - 1 *. 16.79
55
95 V
95 V -IV -SV 16 X 1
50
100 V 100 *, -OV -IV 15 X 3 • :
75
98 *.
»V -IV — ZV 16 X 1
150
98 V
98 V -OV -OV 15.06
BO
700 V 101 V -OV -TV IS AO
45
99 V
89 ** -OV -2 15.56
350
• 78 V
19 V -IV —IV 15 X 7 -
200
* 93 V
93 *, — OV— IV 15 X 5 .
125
125
100
125
MO
25 as -os — 1 *. 15 X 0 -
100 V MOV -OS -IS 15 X 2
96 - 86 S -OS -IS 15.11 *
98 *. 9 SS - 0 *. -OV 16 X 4
91 V 92 *. -IV -ZV 15 X 4
87 V 97 V -OV -IV 15 X 3 -
3 *S »• “OV -IS 15 X 4 •
18 IBS “OS -2 15 X 1 .
95 S 9 GS -IV -ZV 15.74
97 S 98 -OV -IV 15.64
98 V 88 V -OS -IV 16.60
94 *. 95 V -OS “I 15.72 -
Wortd Bank 1«V 87 ... 500
Average price changes... On day —OS on week —IS
DEUTSCHE MARK Change on
Issued .-Bid Offer day week Yield
STRAIGHTS
Asian Dev. Bank 9V 92 150
Australia 9S 91 300
Australia 9S 91 200
Barclays 0/5 In. 8S 94 100
Canada 8S 89 200
Como. Tel. Esp. 1 0S 92 100
Crad. Fancier S’, 92 100
Denmark 10 88
Denmark 10V 92
EOF 9*. 92
EEC 9S 94
EIB 8S 92
Int. -Am. Dev. Bk. 9 92- 1BO.
Ireland 10S 88
Nacnl. Financiers 11 90
Nar. WMU.9V 92 ......
OKB 9V SB
Philio Morris 8V -90 .... 100
Quebec 10V 82
Renin 10 92
Ta u a rn autobahn . 9*, 94
Workl Rank 9S 88
World Bank 8S 92
98V 99 -OS -OV SAS
102V 103V +OV -OS 8 X 2
1Q2S103V +OS -OV 8X7
100 83V 94*, -I*, -2 8X0
200 100V 100V -OV -OV 8X9
100 . 99V 100V -OV -OV WAS
100 ' 95V 96S -OS -IV 9X8.
100- -H00V Ml* +0S +0S R68
100 tuns 102V - 0*1 +0V 9X0
100 199V100S.-0S — b». 9X4
200 ' WV 102S -OS -IV 9.49
S3S 94V -IS -2S.- ax«
. 97 V 88 — 0 V-. 1 V . 9 X 7
100 S 101 V —OS -.1 9 X 1
• 97 S 97 V - 0 *»- IS 11 X 1
tIOSV M 3 V + 0 S— OS 9 X 3
700 », 107 V -OS —OS 9 -«
:»V 9 BS -OV “OV *X 5
TO»V 1 <r*V + °S “OV - 9-82 '
98 V 98 V -7 -IV 10 X 4
1701 101 S —OS — OS 9.68
101 102 -CP, - 0 *,' 8 . 18 -
94 V 94 S .- 1 V - 3 V 9 X 7
100
150
too
750
750
700
50
700
200
Average price changes .. On day — OV on week — OS
SWISS FRANC . . , . . Change on
STRAIGHTS bawd Kd -Offer da« week Yield
Air Canada 6V S? . ... ■ 100
As.an Oev. Bank 7 92... 100
Aucaisa 7V 92 80
Australia 6*, 34 ..... .. .MO
Cie. Nat. I'Enarpie 7 92 MO
CFE -Mexico 8V 82 60
Co-op. Denmark SS 92 25
Crown Zellrbch. 6V 92 .100
Europarar 7V 92
Fint City Fin. 8V 92...
tnd. Fund Finland 9k 92
Kobe City BV 92
Kommunlane 7*, 92 ...
Manitoba 7 92 MO
Mitsui OSK 6S 92 700
Nnlonai Pwr. Co. 8 92
Nipoon T. and T. 6S 32
Ost. Postspar 7*, Hi ...
Philip Morris 6S 92 ...
700
25
30
700
35
30
100
10O
TOO
IDO
Philip Morris BV 9* ..; 100
Quebec 7*, 92 100
Renfe 7V 92 88
Sekisui Pre. S’, 92 WW 78
Soe. Lu*. de Cnt 8S -82 90
Vorariberg Kraft BV 92 60
99 99S —OS -IV 6X5
100V 100V 0 “OV «X4
87 97S +.0V “OV 8,16
TOT 10TS -T. 2V 6X4
MO*. 101V 0. 0 BX3
97S 98 — OV -OV 8X9
104 104V -OV -1 7.75
• 87V 97V +1V — 3V 7-OS
700 100S -OS “OV 7X1
101V 101S -5* -1 8.03
97V 98 . —OS —OS 7X5 ■
BBS 98V -OV -IV 6X1
99 99V -IS. “TV 7X7
702V 102V -IS -2V 6X2
38 8SS -IS “2 6.75
7OZS10ZS -0V “I 7.68
MO. 100V -2 . -2*. 6,58.
103 .-103S -OS -OV 7X6
101V 102 .. -OV — 0S 7X2
101 781V ^ ^-OS -2 6.48
.101 ‘MIS +0S 8 -6.11
102*i 1QTV —IS -IS 6X5
99 - 99V . O - -OS 7X8
102V U»V -0S -1S 5X1
106V 1WS -OV-+OS TXT
IMS 101V +0V -os 6X2
Average price changes.. . On day —OS on week 1 -1S
YEN STRAIGHTS Issued
Asian Dev. Bk. 8V 91... 15
InL-Amer. Dev. 8S 91 15
Japan Airlines 7S 87. „ 9
New Zealand 8S 87 ' 15
World Bank 8S 92 .... 20
Change on
-Bid Offer day week Yield
3 BS 99 S- 0 S -1 8 X 1
101 102 j— OV -OV 8 X 2
95 *. 9 GV 0 -OV 8 X 0
98 *, 99 *. -OV -OS 8 X 3
9 BS 99 V + 0 V -OS 8 X 4
Average prior changes... On day — OV on «wek —OS
OTHER STRAIGHTS Issued
Bell CanBda 16 89 CS... 100
Can. Pac. S. 16S88.CS 50
Cfd. Foncier 17S 89 CS . 30
Hudson Bay 17 89 . 40’
Q- Hyd. 16S 89 (My) CS SO
Quebec Prov. IBS 88 CS 50
Simpsons 16V 89 CS ... 40
U. Bk. Nvvy. SS 90 El/A .18 .
Amro Bank 10 87 Fl ... 150 -
Bk. Mess i H. 10 87 FI 75
EtrroRme MS 89 FI ' 50
Ireland 1 0S *7 FI ...... 75
Phil. Lamps 10V 87 FI.:. 100 '
World Bank .10 87 FI ... 150
OKB 74 88 FFr 400
Solvay et C. t«V 88 FFr 200
Acona 14 85.£ ^ " 20
Beneficial 14V 90 C (D) : 20
BNP 13SS1 C ^:..'-15
CECA 13S 88 £ 20
Rn. Ex. Cred. 13V 86 E 15
Gen. Bee. Co. 32S 89 £ 50
' Hiram Walker 14*, 86 £' • 75
Privatbanken 14S .88 £—32
Quebec TSS 87 £: 35
Peed (Nd) NV 1BV 89 £ 26 .
Royal Troatco 14 86 £.:. 12
SDR Francs !5S 92 £... 30 *
Swed. Ex. Cr. 13V 86 E '20
Euroffma IDS 87 LuxFr 500
E>8 9V 88 LuxFr 600
Bid Offer dwmek Yield
196 96S -OS +0V 18X8
t87V 97V -1 -1 16X1
t9SV 99V 0 +0V17X1
t98S 99.. 0 -0V17L29
f9*V 99V —OV +OV.76L73
798V 9SV ,0 : 0 16.69
95V 86: +0V- ;0VT7X8
*9S 90V +OV -OS 11X3
BBS 99 -OV — OV 10X2
96V 98S -OV — OV 10X8
•99S10Q -OS -OV 10X3
9BV 98V -OV -OV 70X8
99V TOOS 0— V -OV 10X6
97V 98V —OS — OV 10X3
93 ’ 94 -OS +1 16X1
- 92V 93V O d-OS T7X6
• 95V 96V O — OV 15X8
89V 80V -OV -OS 16X6
93V 94V 0 -bV 14.70
■ 95V 96\ -OV -OV 14X2
95V 96V -OV -0VT5X6
.. 92V 93V -OV -OV 74X1
97S ,98S -OV “OS 74X2
94V 9SV -OS +0V 15.78
. 101V 102V -OV -OV 14X7
•103V 704V -OV -OV 75:71
37S 98S -OV “OS 14,86
;99S 100V -OV -OV 75X9
96V 87V -OS -IV 14X8
•9S, 96S 0 0 71X1
91V 92V - D -OS 11.81
FLOATING RATE"
. NOlkS' i Spread
Allied Irish 5*, 92’ : OV
Bank ol Montreal 5V91 OV 1
Bk. ofTokvo'SV 91 (D>- OV
Bk. Nora Scotia 6*» S3 OS -
8FCE 5V 88 0*,
BFCE 5V 87 OV
Caisse Net. Tele. 5V 90 OV
CCCE 5V 2002 ....: OV
Co-Ban Euroffn 5S 91... OV '
Credit ABr|cofe BV 97... OV
'CrBrfft'LvonnaTs 5V 97.:: 0*,
Credit Nat. BV 94 .....: 40*,
Denmark. Knadm. or 82 OSt
Den Norsks Cred. 5S 93 OV .
ind. Bank Japan 5V 88 .OS.
.-IreldrnL SV 89/94 OV
Kansaflis Osaka &S 92 OV.
Lloyds EuroPn 5V 93 ... SO*,
Lanq Term Cred. 5*, 92 OS .
J. ft Worgen 6V 97.:..„ 50*,
’ Nat. Wnat. :Fin. 5V 91... S0V"
New*&mtand 5*, 87...... OS.
Niopon Credit 5V 90 ... OS
. Offshore Mining SV 97 OV
PK barken 5 91 :: OV
Scotland Int. 5*,' 92...... OS
Sec. Pacific 5V91 OV
"Soclete Gen era I a B*, 95 DV
' Standard* Chart. 5V 91 *0V
SuraTtomO Fin. 5V 88... OV
' Sweden- 5V 89 ....' : OV
Toronto Domin'n SV 92 OV
Bid Offer C.dte C-cpn’
98 98S15/7D 15.69
98V 99S 29/10 75V
98V -99V 8/12 15V
98V .89V 29/10 IBS
98V- 99V 28/10 15
99V S9VZ7/7 78V
99 99S21/T0 15V .
98V 98S 77/12 15V
98V 99V 14/10 16 *
-96*. 99V 24/9 16X4
99 9BS 1/10 16
88V 38V 9/9 14,69
t99 99VSS/8 76X4
97V 98V 4/12 IS-.
99V; 39V,1Z/111I4V '
198V 98V 25/11' 14V
98*. 99V 6/71.16X1’
98V 99V 29/10 17V
98V 98V 28/11 14V
98V 99V 12/8 14V .
89 89V15/7 15.19
99V ,99V 7/10 16X6
98*, 99V 10/8 76.06
88V 99V 2/1214.19
98V 99V 17/12. 15X1
9BS 89 23/9 «V
98*. 99V 24/11 15 -
98V 99V 1/9 -15.37
8BV 99- 18/11.14*,
99V. 99V P/8 16 ..
® . 98S~2*/8 1BX1
SSV 99V 1*4/8 16V
G.yld
15X7
15X0
15.40
15X0
15.15
16X5.
16X7
16.63
16.18
15X7
.16.12
14X3
15X7
15X1
14X7
14X7
1SX7
17X8
74X7
14.79
15X0
15X6
76X0
74X3
15X5
15X7
76.13
15^5
16X6
16.10
15X3
18X4
Average price changes .. On day 0 oh week — OV ,
, CONVERTIBLE - Canv. Cav.'
'BONDS.-.- . date price
. A|inomoto 6V 98 - 7/87 .933-
Bow Valley Inv. 8 95 ... 4/81 23.12
Bridgestone Tire 5V-96 3/82 ' 470'
Canon 6V 95 ........ 1/81 829
Dslwa . Sees. 5S 96...;:.12/81613X
Fujitsu Fanuc* 4*, 96 10/8T 5641
Furukawa Elec. 5V 96... 7/81 300
Hanson O/S Fin. 9V 96 8/87 1X6
■Hitachi*. Cable 5V 96-.i.. J 2/82 515
Hitachi Cred. Cpn. 5 96 7/81 1612
-Honda Mow SV 97...... 3/82 8*T
Inch caps 8 95 ....l.._...2/81*X5 '
Knrasafd SV 96 3/81 229
Mann 6.96.. ; 7/87 W8X
Minolta Camera 57S8c.:iO/8l826X
Minoccd 9V37--..: ' 5/82 8.16
Murats 5V.9B 7/81 2168
.NkK. 6*i <96: ; „.., 7/81 188
• Nippon- Chorot-C. 5 31 ...1 0/81 • 819
Nippon Sectric 5V 97... .2782 . 80S
Orient Finance SV 97 ... 3/82 1205 .
J Sanyo Electric 5 SB .10/81 6E2
Siifnltotrio Else. 5V 97... " 3/82 577 X ■
- Sumitomo Met. BV SB... 10/BI 288. *
SwiasTO. Cpn. SVSO... 9/80 .191
KonrahJroka G 90.-0M ... .2/82 S85
Mitsubishi H- 6:89 DM. 2/82. 263
- <a»8.- "
giit' Olftr day Prom
7SPg 81V +1V 0.41-
98 , 99V -OV 70.87
81*. 83V +0S -1X5
81V - 83V -OS _ 5X8
tB2 6* o r 2X6
80 82 +0V 13XS
85S- 87 — 2V -5X5
t89 90 -4. —9X2
- 83*. 8SV +1V 2.76
73S-76S-0S 5X2
80V 82V +0V 3X1
156 58 . O 21X4
60 61S+0V 3xa
9S*i 100V +OV 5X3
■BBS 60 -+0S 2*X6
178 80 -OS 42.13
-66V B7V+0S -19-15
tSBV 70S “ OV SBiJBB
62 64. O 20X4
: SIS SZV +2 8.71
8SV 87V -OS 9.12
84 . 65*, 0 10X3
86V 87S +1 8X8
OS «5 .+TS 44X0
71 73 -1 23.19
. 99V 100V +0V 8.88
W, 91S +7S 23X5
© The Financial- Times. tlr(, -18B2. Ra production in whole
~or in parr in any form .ntir pe rmitt ed- without. wrlttaH
eonaean 7 Data supplied by DATA STREAM iniarnaricriBl.
EUROBOND TURNOVER
{nominal value in $m)
Euro-
Ceflel ‘ clear
XJS. $ bonds
Last week 4,144^ 11,642.6
Previous week 7,412J2 7,342.4
Other bonds
Last week L082.3 841.4
Previous wed: 1,12 LS 659.4
♦No ioformation available —
previous day’s price.
t Only one market maker
supplied a price.
STRAIGHT BONDS: The yield
is the* yield to redemption of
the mid-price; the amount issued
is in millions of currency units
except _ for Yen bonds where
it ' is in billions. Change on
week— Change over price a week
earlier.'
FLOATING RATE NOTES:
Denominated in dollars unless
otherwise Indicated. Conpon
shown is minimum . C.dte=Date
next coupon becomes effective.
■Spread— Margin above six-month
offered rate (t three - month ;
| above mean rate) for U.S.
dollars. C.cpn = The current
coupon. C.yld=The current
yield.
CONVERTIBLE BONDS: De-
nominated in dollars unless
otherwise indicated. Chg. day —
Change on day. Cnv. date = First
date for conversion into shares.
Cnv. price = Nominal amount of
bond per share expressed in
currency of share at conversion
rate fixed at issue. Prem = Per-
centage premium of the current
effective price of acquiring
shares via the bond over -the
■most recent price of the shares.
The list shows^* the 200 latest
international bonds for which
an adequate secondary market
exists. The prices over the past
.week were supplied by; Krediet-
bank NV; . Credit Commercial de
France; Credit Lyonnais; Cora-
merzbank AG;. Deutsche Bank
AG; Westdeutsche Landesbank
Giroaentrale; Banque Generate
du Luxembourg SA; Banque
Internationale Luxembourg:
.Kredie thank Luxemboure*
Algemene Bank Nederland NV :
Pierson. Heldring and Pierson-’
Cr^lit Sitisse/Swtes Credit Bank’;
■ B “? : f f . Switzerland;
Akroyd and Smithers; Bank
oTTafaro International; Banked
Trust International; Chase
httian-^Citicorp Imernltional
Bank, Credit Commercial
securfa® (UK); BBC;
Brak; HU TMen.,tlSiu“^ b d ™ r
Peabody jtotemaHonal; Merrfii
Lynch; Morgan Stanlev tSuT 1
naUona lL. Nikko <ee5rttas clir
pany- (Europe); Orion n C ° m ;
Banl^ Samuel MoouSj an J l ° y n a i
Scandinavian Bank* q nV; P”
. . • ^G | arii 4 rprice S OQj ull e. 18
. ..ii
s '. *.■. ■« mjtrr.-x
' : " V -S;T ~r"T- (
<*-■ t
rsr ■
rf : •
cr®
oi
ofit.
• Times Monday June 21 1982
ami Markets
WORLD STOCK MARKETS
52IM*9J< iACFInduatrt
Mlsh -' Low
Zf* -W* S^umbl* «S.
§5* ■ ^on»bln«o inf... «,
US !Cofnbu»tn-t:ng..l-2aT a
|5i* • loi 8 S?" 101 - Ml son. 9Q*
»7a* , 49J* tOomm. s«tefite_ : Si
! ]£J« jObm|**cleno*J 1H*
21
31
_ . 28
401. • 32
20
Qroyhoqnd
Jl% I 243.
20 14V
l 6B EuroCom Tat
| fl.S'QIit. Brocades 6t
! 47.5'HeineJten . .......... 1 57
I 14.3 Hoogovens 14
6.0 Hunter Douglas 7
I 19.1 Int-Mullor- : IS
86 KLM I as
23.4 Naardo'n I 23
104 Nat Ned Cart ;113
32.1 1 Nad Cred Bank- 32
109.8 Nad Mid Bank ... 136
108 Nedlloyd ..... ;in
68.0 Oca Grin ten 107
21.7 Ommeran (Van*.' 22
37.6 Pakhoad 38
20.3 Phillip* 22
21J!RUn-Schalda 26
300.?!Robeoo 200
118.2,Rodamoo 1123
188.SiRol(noo 186
136,3 Rorento jsi
7 1.8| Royal Dutch,—,... 86
71.2 ttlavan burn'*. _.J 86
179 ,<okyoPacHg 1180
143 I Uni lever <144.
84 | Viking Rea. jl08
38 |VMF Stork 46
48 iVNU I 54 J
61 Wait Utr Bank....: 78.
JAPAN
1BB2
High Low
181 b ! 13V
271, 1 22 V
33V | 28 1*
\ 118
; 104.5; Be roans Bank..
> 104.5
135
, 100 iBorregaardM..
1 108.5
153
! MS (Croditbank-
1 IBB
•54
1 45 |Elk®m
1 46
445
1 300 iKosmos
1 380
356
1 348.5; Norsk Hydro
360
246
1 180 Istorebrand
180
BOV ' 18S.
W
25«b 187.
Vi iI.it '
ft
m
2i. 1 25^ 'Lsnler Bui. Prod
»*■ ' 5? Lese-negler.™...
B87| j 24 iLaaraway Trans. 274,
TOVft ‘i MV
46V 38V
38V ! 86
14l s | 1QV
Lone star Inds^
* i _«• IMasgsy Fecgn. ...j it.
High | Low
AUSTRIA
£3
ftindustr'isj 789.52 78t.41:79BJM 8U1.27; 801.86 809.74 882.62 , 7B8.62 1BIU0 41.22
- V I <«/!> ; (18/8) 07/1/7*) (2/7/12)
-H’meBmW WMtt.M’ 69JBi 6U6( 89.88- 89.77 , m.'H j 65.87 ■ . — —
. ^taTsport^} S0SJjl3MJB37fl^31WI^314.82f31fl.B«' TOMB I 1 447.J8 12.62
"l - i “I ■ J nailh /ifiiMit tamrii
447. M 72.52
im/ii) w?m
mju 1U
■ i ■ > -» - . : ~ ! , any i rw/B) 0 m/>d (i/7/R)
. OWnthtt^.i 7flB.7fl l87.0fl 108.41 108.87* 108.22 MB, 88 17SJBB j 102.11 18UZ 1U
Ki^L' •• —i - I i . • 17/SJ 1 t«/V CaV»«9) 0HM/4Z)
r^OOCft. [sB,800«,Baa.5ASM44J70f40,7BB|68 > inO • "I -r 1 - .
.■•r I I ; I -i - I . i ’
AUSTRALIA
All Ord. (1/1/Ul
Metal ft Mind. 00/88)
AUSTRIA
Oredlt Aktlan (2/1/82)
June | June i June ' Julie :
18. ' 17- : 16 , 15 |
1 ,HL»7i 60.82: HjB2i BUU>! 5E.SS (4/1) - M.82(IB/B)
♦ D«y’* high 793.67 low 784.63
128.22 (26/2)
878,86 iWT)
6S6J.08/7;
KlJWbsWs J US.flflJ ISQ.ISj 181,96 I ELM J22J* WAJil 1*7.28 ' 116.41 I 780,!
r i f I • - ; 1 1 (4/1) I (Ml 488/17
.^Wnp’Htef WJSl TO7.89* 108.17 189.88, 109,9* 71124, 12L74 , 167.* 140.!
i's%WT r < ! , •• -14/11 ;.08,Bj KWH
HOLLAND . : J ; 7j . i
ANP-CB8 General 0870) 1 872 • 882- ■ 88.4 1 884
AN«47BSIndwt(18»j 1874 .' 8.1 f U J > »4
qzhz
, . terflMfl P/E ratio
^'•Lo»w Gov. Bond yield
JAPA/r*
.7187.7. 171BL8B 7141.38 7191.88 782846 tt7M) ! B68S46 (17/51
Tokyo H«W SE 0/1/81) I 68147;- 536.88. 658.71; 640.15, . 68349(27/1/ .. WgIto llf/lj
' TOMWTO/Compotftol K68.1l 1877,
:. ‘; - T. ; - - : NEW YORK ACTIVE STOCKS
• . Clung e
,fridfly..r:.- Stocks Closing on -
810.78(8/1)
68*42(89/4)
Ilf
Swfw Bank Cpfl,Ci1/U/«
■ ■> ' . . Clungt
>'*■ ^fridfly .-r:.- Stocks Closing on
>' ‘ »-i •ttsdSd-‘:-ptkA ■ dflY
••©t« 8 .:S 8 nrteft 05 ^ 3 Pi»» S», + 15 *»
TVtrinr. 7«5.9» 16V - *•
Guli Oil 1 . 401.700 *. 27 *i 31 .
! &own * «ss,«po .271*. + H
Sony flaffiSa -13?» + h
. Gsnersf Mtn
• nlt
Philbro-Sfll'it'
Amr.. Exftrtss
Tim*-
Change
-Stocks Closing on
traded, price . . day
<71.100 + V
461000. 36 . ;•+ 2*t
462,000 2H*. +. i
449,900 40V “ ‘I
420.500 SM . h
m
I**) 'Slturdfl/. June "12; 3epsn Dow 7.245.01, TSE 544JM.
— w Mwpt.Amtieite AH Ontburr and Meuts-
600, WYSE All Com moo- 'SO; Standard and Poors- - 1 0; sntf Tofcoto— UXXV dw
rest Mined bassd oa WS. Excluding bonds. $40fr toduatriais, 1400
ladttetrisis- Bias ,40 .iWRtlss,, 40 fawaiAla uid.20 Tiauu parts. a Ceased -
u Univslisbls. .-•*
Financial Rand USS0.744
(Disconnt of 16%
BRAZIL
I ,
1BB2 June 18 pr
High Low . c,
*-®6- 1.32Acesrta : ]
c’Sx.' Banco Brasil it
6-72, 3.1 iBelgo. Min t
Z'aS f. 3S Brahma PP 1
f 6.5QLogaa Arner 6
■iSoS’ “■OO.Mannasmann OP, 2
Petrobras PP • lz
i^Bouza Cruz j 11
, l £-0 J 4.65;Uni D PE 7
1740, 7.6 jVale Rio Doce. „| 16
TEL AVIV
-Company
Prices Change
June 20 on the
1982 weak
. 470iAJuiUuwe„ J 470
' 860fBrown Boverl...,. 860
l^OO.CIba-Gelgy | 14 «jo
, OlO do-fP'rtOert.L 986
1.665 ICredit Suisse 1,685
2.J59 Eloktrowatt- 84S0
fOOjFlaher (Geoi_ 440
*2'S29 Hoff-RochaPtCte 54.BOO
«'S25l. H ? ff ^ ochB 1/10 - BvMS
WBOllntBrftxxl 5,475
lfieoJjOiHWil Lfiflo
800 Landis ft Gyr. Bf ‘
3|070Nostlo. 30-
1 *gfS&.Lf 1 uel1rle iSiu
. ■ — — — ■ KICUK
Banking. Insurance
and Finance
,B ,s «ol--- 1.379 ■+■ 28
IDB Bankholdlng 2,191 + 9
Bank HBpoeiun Br V81B + 10
Union Bk. of Israel Br. 1.416 + id
United Mizrahi Bank. . 933 + 10
Hassneh Insurance Br. 1,552
Leunii Mon. Bank Br. 840 + 40
Tdahot" Isrl. Mi. Bk. 2.285 — 18
Land Development
Alnca* Israel Inv. IC10 4.2flO + 30
Israel Land Dsvpt. Br. 1,450 - fin
Property and Building... 1,790 20
Public Utility
Israel Electric Cpn, ... T.400 ;-l* gg
Investment Companies
S»nk Leu mi Invest. ... 933 — «
Clal " Israel Invest. 972 4. 2a
Discount Invest 1 # 1B5 20
Commercial and
Industrial
£®sd Sea 2,200 U--
Pol gat ‘ B - 2 ;035 +2S
Argsman Textile Br, ... 1.652
" Ate “ Tesdle " B "... i.i 2 fl •+
Amor. Israeli p Dr . MiHs 1,545 - 45
! E J*tfl ; 435 _
T -"«» . i*» r,jf
Fuel, and Oil
D,l ‘ k -, a
A. "T B ,d" fc '-“IBM.T.I
■nd ere last traded prlcoa sSfi?* 16 *
suspended, xd Ex div&«M «
l*fluo. *r Ex rights. „ all. & ***»
20
Companies
and Markets
CURRENCIES, MONEY and GOLD
MONEY MARKETS
Growing marital
Europe may be trying to divorce
itself from the effects of volatile
U.S. interest rates, but even a
period of trial separation is prov-
ing difficult to achieve. The net
result of keeping European
interest rate movements down to
a minimal level as Eurodollar
Tates soared was a sharp fail of
of ail major currencies against
the dollar.
but the response from other were concerned the surge in Port Stanley -was taken. The
currencies was fairly restrained. Eurodollar rates overshadowed strength of sterling against ail
Sterling. D-mark and guilder the successful conclusion to the currencies except the dollar gives
An unexpectedly large rise in
U.S. housing starts last month,
was interpreted as evidence that
the economy is more buoyant
than expected, which coupled
with projections of heavy U.S.
Treasury borrowing to finance
the Budget deficit. led to grave
doubts of any marked fall in U.S.
interest rates In the near term.
Eurodollar rates rose by about
one percentage point last week.
Euro rates rose slightly, while
Euro Swiss rates moved up rather
more, but from much lower
levels, following the increase in
time deposit rates by Swiss
banks.
Rates supporting two of
Europe’s weakest currencies, the
French franc and Italian lira,
actually fell, but this is not quite
as surprising as it first seems
because following the recent de-
valuation of both currencies the
need for protection has eased.
Belgian rates were forced higher
however as speculative attention
tended to switch towards the
ground war on the Falklands. some cause for comfort, but the
This was largely because a opportunities for any further
British victory had already been . cuts in London interest rates are
discounted, as illustrated by the likely to.be severely limited by
cut in London clearing bank events oh the other side of the
base rates several days before Atlantic.
WEEKLY CHANGE JN WORLD INTEREST RATES
LONDON
Base rates
7 day Interbank
3 mth interbank
June 18 ohange :
■ NEW YORK.
I June lfichange
-12is lunch' di Prime rales -161*
■lBSa-lSTg — 1 < ' Federal funds ■ ; 14.i4i4.
v . .12 ; a-l3,’ a .+ • 3 mth Treasury BiH* 12.57
Treasury Bill Tender 112.2425 ' + O.IJ640; 6 Mth, Treasury Bills j 13,08
Band l Bills ’l2sa -Unch’d 1 3 Mth. C D - .16.10 \
Band 2 Bills Unch>d > cramkfiirt
Band 3 Bills . -12JS* ;: on
Belgian franc as a potential can- 3 Mth. Treaaury^.lfci urtarbank ! alio
HiHaT* fnr trot ^nrvtbpi- TT*TS J Mth. Bank Bills 12- . JhjBh.d ^ mohth - C. 9Q*
•Unch'd
— l B
! + 0.67
+0.92
,>L35
didate for yet another EMS re-
alignment.
As far as financial markets
;ia*
Unch'd
9.225-
Unch’d
lUnch'a
+ 0.075
TOKYO
One month Bills
Three month Bills
7.34379
17.26125
BANK OF ENGLAND TREASURY BILL TENDER
BRUSSELS
One month
Three month
15s*
15*4
June 16 June 11
June 18 | June 11
Blits onolfer 1 £100m ClOOm Top accepted
Total of i 1 rate of discount 12.2536% 12.2 1555
applications 1325.555m £494 .2 5m Average
Total allocated.... £lOOm £lOOm '• rate of discount, 12.2425% 12.1777%
Minimum Average yield 1 12.53% • 12.56%
accepted bid.....: £96.945 : £96.955 'Amount on offer j
Allotment at i ; at next tender... £100m | £100m
minimum level..." 59% 1% I - ■
AMSTERDAM
One month
Three month
:B!a
9>a
PARIS
_ .„ Intervention Rate
t n alls 1 Mth - Interbank
+ 0,0525 -r^rea monlh
MILAN
One month
Three month
DUBLIN
One month
Three month
lists ‘
151- •
,-lt
— i:
:-fi
+i
abri
-1|
Unch'd
19**
'19i,
-I*
-*e
London — band 1 bills mature In up to 14 days, band 2 MM* IS to 33. days, anil
band 3 bUle 34 to 63 days. Rates quoted rapresani Bank of England buying or
selling rates with the money market In other centres rates are generally deposit
rates in the domestic money market, and their respective changes during tbs
week. "B and 4 121,.
FT LONDON
INTERBANK FIXING
LONDON MONEY RATES
3 months u.s. dollars
bid 16 5/B
Offer 16 L2
6 months U.S. dollars
bid 16 1,2
Offer 165.3
Tha fixing rates (June 11) are tno arith-
metical means, rounded to tha nearest
one-slxtmntb. of the bid and offered
rates for SlOm quoted by the market to
five reference banks at 11 am each
working day. The banks are National
Westminster Bank. Bank of Tokyo.
Deutsche Bank, Banque National da
Pena and Morgan Guaranty Trust.
Local authorities and Finance houses aevon days' notice, others aoven days Fixed. Long-term local authority mortgage
rates, nominally three years 134 per cent: four years 134 per cent; five years 134 per cent. ® Bank bill rates in table
are buying rates For prime paper. Buying rates For Four-month bank bills 12*jf-124* per cent: lour months trade bills
12*4* per cent.
Approximate selling late lor one month Treasury bills per cent: two months 12'n-12*i* per cent; three
months 124s-124 per cent. Approximate selling rate for one month bank bids 12 u k- 12' 2 per cent; two months . IZ 1 ^-
per cent and three months 1Z4*-124 per cent: one month trade bills 12*4, per cent; two months 12 u u par cent: three
months 12*4* per cent.
Finance Houses Base Rates (published by the Finance Houses Association) 14 per cent from June 1 1382 London
and Scottish Clearing Bank Rates for lending 124 par cent- London Clearing Bank Deposir Rates For sums at seven
days' notice 94 per cam. Treasury Bills: Average tender rates of discount 12.2425 per cent.
Certificates el Tax Deposit (Series 5) 13 per cent liom June 8. Deposits withdrawn For cash 104 per cent.
EURO-CURRENCY INTEREST RATES (Market closing Rates]
Juno 18
Sterling
> UA
Dollar
Canadian ;
Dollar
Dutch
Guilder
Swiss
Franc.
D-mark ■
1 French 1
1 Franc
Italian
Ura
Belgian Franc
Cony. ’ FJn.
Yan
j Danish -
Krone
Short term
12ti-12Sfl
I45e-147q
15j 4 -i6h :
8 is -ft*
2 2 1*
e.; -ft,;
, I 5 I 4 -I 6 1 * ,
18-20 •
15-17 ; 141*15
6bfl-6<B .
! 20-211®
7 day's notice. .
125j 12i*
14: 8 -I5i a
16 U-17 U '
8;j 8;.
2i 2 -3
1 15S4 -161* ,
T9-205r
15-171* 14>i-15
8ji'-7r»
■ ia ig - 20 '*
Month
12;, -12...
15>« 15t a
17i»-37ie
9 9: b
17U18 ;
20-21
16i*-17i 2 . ISSs-lSIs .
7I8-7U
• 1713-1833
Three months.
124:*- 13,;
15i»-16
1758-17-3 '
9rl 9.1
8fi 8ri.
1714-1812 1
21-2158
17L-1813 1 15b B -15ie
7.i-7;V
18&4 20 ti
Six months
13-1.31,
15>0 161s
174 17>«
9„-9,'..
6,;-6|„
9fli B
, IBVIBIj-u
21-21*,
17-18 154b 16-s
7.--7.-.
18)4-19*4
One Year
13 1,-13 U
i3;M6 :fc
1714 171* ,
9>j 93s
. 1814-19 r
22 Sa-23 Jb
. 1614-171* 151* 15»t
7ls 7 U
. 1816-19^
SDR linked deposits: one month 13-134 per cent: three months 13'u-12 u » per cent: six-months liJV-IS 15 !* per Cent: one year 13’a-l3 D n per cam.
ECU linked deposits: one month 12* ta -12“i» gar cent: three months 124-134 per Cent; six months 134-134 per cent: one year 1><«-13>, per cent.-
Asian S (closing rates in Singapore): one month per cent: three months 164k-164» par cent: six months 1B4»-164» per cent: one year 16-164 per cent
Long-teim Eurodollar two years 154-16 per cent; throe years 154-164 per cent; tour. years 154-16*1 per cent; five years 154-164 par cent: nominal closing rates.
Shan-term rates are call for U.S. dollais. Canadian dollars and Japanese yen; others two days' notice.
The tallowing rates were quoted tar London dollar certificates ol deposit: one month 15.10-15.20 per cent; three months 15.45-15.55 per cent: six months 15.65-
15.75 per cent; one year 15.60-15.70 per cent.
CURRENCIES AND GOLD
THE DOLLAR SPOT AND FORWARD
Dollar very strong
June 18
Day's
spread
Close
One month
%
p.a.
Three -
.months
P-».
The dollar touched new peaks
in the foreign exchange market
last week as a result of the
sharp rise in Eurodollar interest
rates. The six-month rate
touched 16J per cent on Friday
morning, and finished the week
at 16 per cent, compared with
ISA per cent on the previous
Friday.
Fears that U.S. rates will re-
main firm, and that Eurodollars
could touch even higher levels,
pushed the dollar up to record
levels against the French franc
and Italian lira, and the highest
level for some time against other
major currencies. Although the
French franc appeared to have
temporarily solved its problems
within the European Monetary
System, it was fixed at an all-
time low against the dollar at
the Paris fixing on every day last
week.
The C7-S- currency was fixed at
a record FFr 6.S020 on Friday,
and continued to advance later
in the day. finishing at FFr
6.8250 compared with FFr 6.3350
at the end of the previous week.
It was a similar story in terms
of the lira, which ended the
week at LI. 381 against LI, 327 a
week earlier.
The dollar rose to its highest
level since the end of August
1981 against the D-mark closing
at DM 2.46 compared with DM
2-3950 on the previous Friday,
and touched the best level since
last September against the Swiss
franc, rising to SwFr 2.12 from
SwFr 2.0475 on the week.
Low Japanese interest rates,
compared with New York, also
pushed up the dollar to the
highest level for over two years
against the yen, closing at Y255J0
compared with Y247.50.
The dollar's trade-weighted in-
dex. on Bank of England figures,
rose to 120.5 from 116.7 Ster-
ling’s index improved to 91.2-
from 90.4, despite the pound’s
decline against the dollar. It
fell to the lowest level for nearly
five years against the U.S.
currency, finishing on Friday at
SI. 7395 against Si. 7750. On the
other band sterling rose to
DM 4.28 from DM 4.2525: to
SwFr 3.6S75 from SwFr 3.6350:
to FFr 11.87 from FFr 11-2350
and to Y444 from Y439.50.
Gold suffered from the dollar’s
strength, falling to S305-306 on
Thursday, the lowest level since
August 1979, and ended the week
$19 down at $307-308.
UKt
Ireland!
Canada
Nethlnd.
Belgium
Denmark
W. Ger.
Portugal
Spain
Italy
Norway
Prance
Sweden
Japan •
Austria
Switz.
1.7390-1-7400
1.3960-1.3880
1.2880-1 -2890
2.7025-2.7075
47.12-47.14
8X740-8.4790
2.4595-2.4805
83.05-83-25
111.15-111.25
13804-13814
6.2310-6 .2360
6.8225-6-8275
6.0660-8,0710
255-05-255.15 ' 1.77-1 -6Sy pm
17.264-17.Z74 114-IOpro pm
2.1195*2.1205- 1.80-1 .72c pin
t UK and Ireland are quoted in U.S.' currency.
1.7300-1.7470
1^950-1.4040
1. 2870-1 .2835
2.7000-2.7100
46.S5-47.15
8.4740-8.4975
2^4450-2-4850
82.76-83.25
110.90-111.25
1377-1382
5.2300-6.2500
6-7850-6.8300
6-0660-6.0830
253.40-255.25
17.26-17314
2.1100-2.1250
0.34-0. 44c die
0,51-0.4Tc pm
030-0 -23c dis
1.55-1 -45c pm
2 -6c dis
0.40-0 -SSora dis
1 -33-1 .28 o I pm
20-1 30c dis
87 -97c dis
54-841 Ire dis
1.60-1 -20ore pm
V-14« da
0.60-0.30ore pm
-2.59 1.37-1.47dis -3.26
3.94 1.18-1.Q3 pm 3.15
-2.00 0.52-0.56dis -1-88
6J6 4.90-4.75 pm 7.14
-1.02 17-22 dis -1.66
-0.74 1.00-1.50dis -0.59
8-38 4.30-4.25 pm 6.95
-11.54 70-370dls —10.58
-9.95 200-240dis -7.33
-5.00 17-19 dis -5.21
2.69 1 .80-1.40 pm 1.03
-1.99 3-4 dis -2.06
0.79 2.40-2-20 pm 1.52
8.14 K.5S-5.45 pm 8.62
7.37 34-31 pm 7.51
9.96 5.40-5.32 pm 10.11
Forward premiums and
discounts apply ro the U.S. dollar and not to the individual currency.
THE POUND SPOT AND FORWARD
June 18
Day's
spread
Close
One month
p.a.
Three
months
V.
P-a.
U.S.
Canada
Nethlnd.
Belgium
Denmark
Ireland
W: Ger.
Portugal
Spam
Italy
Norway
France
Sweden
Japan
Austria
Switz.
I. 7300-1.7470
2.Z375-2JS45
4.68-4.73.
81.35-82.15
1457-14.81
15360-1.2450
4.24 1 j-4-29 1 j
143.70-145.00
192.20-19G.80
2386-2407
10.82-10.89
II. 78-11.88
10.54-10.59
440-446
29.87-30.17
3.66-3.70
1.7390-1.7400 0.34-0. 44c dis
28415-28425 0.83 -0.93c die
4.7T.-4. 721. 1VU.c pm
81.95-82.IS 22-32c dis
T4.78S-14.79ii 15-1640 re dis
1i24l5-18430 0.S3-0.75p dis
4.274-4 834
144.40-144.90
193.30-133.50
84004-24024
1085-1086
1’«-14pf Dm
80 -206c di*
41 0-45j c dis
13-1Bllre dis
6-74ore dis
11854-11-874 a>r54cdts
10.584-10.574 34-44ore dis
4434-4444 2.20-1.90/ pm
30.03-30.03 . 34-27 1 tgn pm
3.684-3894 24-2e pm
Belgian rate is lor convertible Irenes Financial Franc 90.96-91.05.
Six-month forward dallei 2 .78-2. 88c dis. 12-month 4.72-4 92c dis.
-2.69 187-1 ,47diS -3.26
-4.71 2.68-2.78dis -487
3.81 44-44 pm 3.92
-385 85-105 die -488
-12.78 294-314 dis -885
-6.66 181-2.10di» -686
385 4*r4 pm 3.97
-14.31 240-778dis -14.07
-26.83 790-835 dis -16.80
-784474-514 dis -984
-7.25 114-134 dis -454
-4.55 134-1 P, dis -4.97
-483 VrV, dis -1.51
5.54 6.45-6.05 pm 5.63
12.28 634-514 pm
782 6 4-64 pm
7.65
6.91
financial iimeS-Moiulaf a
June 18
1962
Sterling 1
Certificate 1 Interbank
of deposit- :
Local 'Local Auth-
Authority .negotiable
deposits | bonds
, .Finance
. . House
'.Deposits
Discount l
Company. Market Treasury
Deposits! Deposits: Bills*-
Eligible ]
Bank •
Blits* >
Fine
Trade ‘
Bins*
Overnight.
11-16
121*12*4
1 ._
—
12*4-13
11 - 121 -
“ ‘ 1
2 days notice. .
—
126a 12*4
j -
—
- . - •
*
—
—
|
— , —
—
. M .
7 days notice ..
123a-127 3
12 * 4 .
i
13-131*
121 * —
:
One month . ..
12 i a 12*4
12. ..-13
12 ; 8
! 13S8-130b
13
131*
121 * 12 T :.ia r V 12(5 • »
13rV
Two months.. .
12 r*- 12*4
127sX3,;-
1 13i*-131b
13.U
1314
12 >4-1230 124*- 12,;
I 2 y • !
lSsfc
Three months.
12 ?s- 12 *i
127, 13, L
ia?a
: uiu - 13
ia,;
1314
12)4 12/-.]2J«
•13*
12r;
Six months ...
12' -12*4
12-> 13lj
13
' 1230-12
—
*
X3 ( ;-12««.
12*4
12 Vi 12*4
13131b
—
.. 13i 4 -12 h
131-4
One year
13 12 ;;
13,1-13.4
13
! 13 1 8 12*4
13 14
—
— —
_ l
—
Two years
—
—
13*e
i —
—
—
— ■
—
FT UNIT TRUST INFORMATION SERVICE
IHt.Tfe M rn w
TMa faunae w. tefctav 0296 590
ienwot ' S
1 RtefawS& EtZAlHJ ' y, -~^-aHJBMgo&
435b'fe
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Dunbar On ft Trast Mimgerr Ltd.
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Extra
Ox
Ltd.
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fenenhaiiftL U Wk lft carte. 099433377
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2a Abchradi Imia, landee EC4N.7AL.
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Aadersmi Unit TrwtPiwraseni Ltd. , iiii*
62, London WNl,EC2R 700 OU3B1200 rtastS___
AademaU.T (67.7 7331 —J 336 , c.6*7*._
,4, &cra S4HWeosflaqd» i ^C3P 3EP ;'j.
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Lead AatherWes’ Mntrad fawCTst* -
77. LsndBD VML EC2N XOfi. • 0X8662825
Aatncher Unit MgaL Co. Lid.
Jratws Fbttay Unit Tm*. Mngt. Lid.
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Said- 26
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Da Prf. A'ihJ
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Da taaxne
BMng B ro ttw ft Co. Ltd.
ft Bbtiapigrae, EC2N4AE.
Gvtmora Fend
25L MwyAxs, EC348BP
Scoffisb tatiaMrltiv. ,
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327 j« -15| J 55L
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■ v H7J 50Jr.-tt2L 6.»
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Accnm. Juee8
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’"Jane 29. "MatUi MnpL
Britfae FM Managers (aXc)
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Peraara Td Jwwlftjyj. v : '. Li. ^ . . _ .
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Stewart Unit TsL Dfanagcn UdJM
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Deefess: 0296-590.
Trades Uman Unit That M— den t
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FORWARD RATES AGAINST STERLING
GOLD MARKETS
June 18
June 17
.. 5307-308
Gold Bullion (fine ounce'
,£I761*-1771 S305-306
r£ 175-175 1*,
Opening 'S306-307
Morning fixing. ..,5307.50
Alter noon fixing. S306.76
ȣ1751*-176i
(£177,3 36<
.£177.188,
'S3 12*4-313*<
IS313.50
5309
(£179-1791*,
■ £179^46)
,£176.854,
\
Spot
1 month
3 month
8 morrtfr-
12 month
1.7434
1.7533
1.7678
1.7877
D-Mark
4.28
4-2662
4.2375
4-2030
4.1384
French Franc .. .
11.9160
12-0175
12.1880
72.4167
Swiss Franc ...
3.8876
3.6860
3.6238
3.573Q.
3.4705
Japanese Yen
442.0
437.8
432.1
420.7 ..
EMS EUROPEAN CURRENCY UNIT RATES
Gold Coins June 18
ECU
central
rates
Krugrnd S3164-317ij i£182-lB2k)
1/2 Krug S165 i s - 1641 3 <£94-B4I = i
1/4 Krug 683-84 i£474-484>
1/10 Krug S34-85 i£19is.20i
Mapleieaf S316i;.317ij i£1814-182isi
New Sov 67315-74 (£434-42121
{King Sov
Victoria Sov
'French 20s
130 PSQS Mex.
100 Cor. Aust
!S20 Eagles
S88ta-84 i£47l2-48j
S82 ic-84 i£47l5-48 (
6675,-70 i £3 9-40UI
S377t2-380 i£8 t7-816in
5300-302 is i£17Z&-L72j]
9374-379 (£2 15-2174 >
Belgian Franc ...
Danish Krone ...
German D-Mark
Franch France ...
Dutch Guilder ...
Iriah Punr
Italian Li /a
OTHER CURRENCIES
46.2288
8.16466
2.359B1
6.54272
2.60381
0.688778
1328.04
Changes are lor ECU. therefore positive change denotes a
weak currency. Adjustment .calculated by Financial Tunes.
44.9704
8.23400
2.33379
6.61387
2.67971
0.691011
1350.27
CURRENCY MOVEMENTS CURRENCY RATES
June 18
Argentine Paso ..26.558 26,598 115.250-16,300
Note Rate
June 18
Austria..
Au*trallaDollar... l;6965- 1.6B86 j 0.S760 0.9765, Belgium
29.80 30.10
90.Sfr91.50
I Bank of i Morgen
England guaranty
1 index Chxnges%
June 18
iBank
' rate
t %
Special
Drawing
Rights
European
Currency
units
Brazil Cruzeiro . 289.42-290.42 [ 166.Zl-l67.04 < Denmark • 14.63-14.77
Rnland Markkas 8.1894.221 1 4.7200-4.7220 I Franco
Greek Drachma.. 1 118.28 1 -ISO. 148 ! 68.00 68.50 'Germany.
Hong Kong Dollar 10.27 is 10.29 ■ 5.9100 5.9150 | Italy
IranRial 147.20* 83.90' : Japan
KuwaitDInanKDi OJDQDfi4.504ia i 0.2B8 1 -Q.28B3 i Netherlands
Luxembourg Fr..' S1.954I8.0S ! 47.12-47.14 j Norway
Malaysia Dollar. ..4.1010 4.11X0 2. 35SO 2.3620 1 Portugal
New Zealand-Dlr.2.3260 -2.3300 : 1.3390 1.5405 ! Spain
Saudi Arab. Rlyal r 5.97-5^8 1 3,4305 5.4325 i Sweden
Singapore Dollar 3.7530-3.7630 . 2.1590-2,1650 i Switzerland.—.. 3.67-5.71
Slb.AfOcan Rand. 1.9570 1J585 1.1250-1.1260 1 United States, .., 1.72id-1.741s
UJX.L Dirham. ..: 6JS9 6.40 . 3.6715-5.6735 1 Yugoslavia^ ; 69>;-106
11.73-11.83
4.23-4.27
2360-2400
44Z447
4.674.71
10.83 10.93
140 156
1841( 194
10.51 10.61
Sterling
U.S. dollar
Canadian dollar.... i
Austrian schilling..
Belgian franc..
Danish Kronar.
Deutsche mark .'
Swiss franc . ...'.
Guilder
French franc
Ura.
Von ..
91.9
120.5
85.3
117.4
95.0
82.4
185.1
143.7
116.5
74.3
53.6
132.6
~ 32.1
4-12.6
-21.5
+ 27.0
— 1.7
-14.3
. 4-49.4
-t-93.4
4-23.4
-19.8
—58.4
+ 26.2
“Selling rate.
Based an trade weighted changes (toes
W as l d ng iu n agree m ent ti acambaz. 7971.
Bank of England kdar (bass average
W7S-100).
Starling - .0.629461 j 0.553968
U.S. S l 12 1,09248 ! 0.962519
Canadian S- 16.59 *
Austria Sch.' 6 J 4 18^903
14 51.3988
11 1 9.27746
7l 2 . 2.68246
B .2.96885
flia' 7.43071
19 1607.65
5 >s 280.318
9 6.82605
B 181.230 ,
ID 6.04634 6.84441
513 2,31322 < 2.03813
Belgian F..
Danish Kr,...
D mark. 1
Guilder.
French Fr....
Ura.w.
Yeh
Norwgn. Kr.,
Spanish Pts-
Swed'rth Kr.
Swiss Fr
1J24280
! 16.6323
'45.2268
B.1B4&6
i 2.35961
i 2.60561
6.54272
: 1328.04
,244.961
1 6.00564
.106.888
Greek Dr'ch.' 20 >2 N/A [66.4001
‘CS/SDR Raw for Juns T7; 1.41082
EXCHANGE CROSS RATES
June 18
Pound Stirling
U.S. Dollar 1
1 DwitsdierrTlq JapaneseYen
FrenchFranc
j Swiss Franc
1 Dutch Guild'
Italian Ura
^n&dtaDaltar Belgian Franc
Pound Sterling
1
1.740
4JB0
444.0
11.87
1 3.688
4.718
2402.
2.242
i 8 2. GO
U.S. Dollar
0.575
1.
2.480
255 JJ
6.824
. -2.120
2.712
1381. .
1.289
f 47.14
Deutsahemark
0,234
0.406
! 1 .
103.7
! 2.773
0.862
1.102
561.1
0.524
19.16
Japanese Yen 1,000 |
3,252
3.918 j
| 9.640
1000,
1 ■ 26.73
1 8.305
10.63 ^
5409.
6.050
1 184.7
French Frank 10
0.842
1.465
3.606 • !
374.1
10. 1
3.107
3.974
Z0Z3.
- 1.889
69.08
Swiss Fra nc
0.871
0.472
, 1.161
120.4
3.219 ]
1.
L879
651.3
1-
22.24 -
Dutch Guilder
0.212 ;
0.369
0^07
94.12 !
2.516 1
0,782
1.
509.1
0.475 , ;
17.38 ‘
Italian Lira 1,000
0,416 |
0.724
1 1.78Z
184.9 |
4.843
1.535
1.964
1000.
■ 0 J34 {
34.15
Canadian Dollar
0/446
D.77S
2,909 !
196.0
5.294 !
1.645
. 2.104
1071.
• J’. i
36.57
Belgian Franc 100
1,220
2.121
5J220
641.6
14.48 . .
4.497
5,753 !
1929.
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FINANCIAL TIMES
Monday June 21 1982
Italian alarm after banker’s death
BY RUPERT CORNWELL. IN ROME
THE MACABRE discovery of
the body of SIg Roberto Calvi,
61. chairman of Banco Ambro-
sia no. in London has created
consternation and alarm among
Italy's financial community and
politicians alike.
The body of the financier,
until last wek at rhe helm of
his country’s largest banking
group in private hands, was
found hanging from Blackfriars
Bridge on Friday.
Only a post-mortem tomorrow
will determine bow he met his
death in this situation.
Italian magistrates just back
from London appear to support
a suicide theory.
The death has been the cli-
max of a dramatic week in Rome
and only underlines how the
Ambrosiano affair threatens to
prove Italy’s biggest financial
scandal since the collapse of
the Sindona empire in 1974.
The basic uncertainties are
twa-£old. Immediately, the auth-
orities are deeply anxious about
how markets will react today.
The gathering crisis at Am-
brosiano led to a 30 per cent
drop in its share price last
week before trading was sus-
pended on Thursday night, and
the Bank of Italy nominated a
temporary commissioner to
take cbarge.
Hours later Sig Calvi’s pri-
vate secretary took her life.
At the weekend a second
group of three commissioners
was appointed by the Central
Bank to superintend Ambro-
siano. This move, the Central
Bank hopes, will avert a crisis
of public confidence and a pos-
sible run on the bank.
All aiong the authorities have
maintained that the Italian end
of the group, including the
Toro insurance group, Credito
Varesino and Banca Cattolica
del Veneto, the most profitable
single bank, is sound. Total as-
sets are little short of $20bn
(£11.5bn).
This is despite Anzbrosiano's
reported involvement with the
troubled Itaknobiliare concern
of Sig Carlo Pesenti, and with
the debt-ridden Rizzo! i publish-
ing house.
The real doubts revolve round
Latin American offshoots of
Ambrosiano. in particular the
Banco Andino of Lima.
In a letter to Sig Calvi shortly
before he vanished from Rome
on June 10 the Bank of Italy
intimated tbat these subsidiaries
had a total exposure of $1.4bn
in loans of which little is known.
Sig Calvi kept details of the
intricate operation of foreign
subsidiaries a closely-guarded
secret. It is widely believed that
through them he held effective
control of the bank.
For over a year he was at the
centre of mounting controversy,
in particular since the deal with
Rizzoli, whose ownership ‘ of
Italy’s most important news-
paper. the Corriere della Sera,
makes it the object of intense
political interest.
Within weeks he was charged
with currency offences and
appeared in the membership
list of the P-2 Freemasons'
Lodge, alleged to have been a
“State within the State," Dur-
ing his trial he tried to commit
suicide, and in July was sen-
tenced to four years' jail.
He remained at liberty pend-
ing ac appeal due today. Con-
sistently good results from his
bank.? have not prevented
allegations of improper conduct
at Ambrosiano. and of close
involvement with political
parties.
The circumstances of his
flight from Italy on a passport
carrying the name “ Giampiero
Roberto Calvino " are a com-
plete mystery, as is his reason
for going to London, a city
which never featured in his
affairs: and whom he saw there.
Many believe that he was
under fierce pressure, possibly
related to he P-2 and its fugitive
grandmaster. Sig Licio Gelli.
In April Sig Roberto Rosone.
Ambrosia no’s deputy chairman
and Sig Calvi’s right-hand man,
was wounded in a Milan shoot-
ing. widely interpreted as a
“ warning ” to Sig Calvi himself.
Conceivably 'light could be
thrown to the background of
the whole murky affair by the
interrogation under way in
Rome of Sig Bruno Tassan Din,
managing director of' Rizzoli,
arrested on charges of irregular
dealings in shares of ari insur-
ance company.
He, like several other senior
Corriere journalists, was also
involved with the P-2.
To the end Sig Calvi insisted
that his troubles had begun in.
earnest with .the agreement, of
dubious financial justification,
linking La Cenlrale with Rizzoli
— Corrier della Sera. .
Gareth. Griffiths writes: The
City Police said yesterday it was
trying to establish where and
when Mr Calvi entered the UK,
and what his movements were
from entry until death. No date
for an inquest had been set and
Interpol would be kept in-
formed of developments.
Five senior Italian police-
men. including the Milan
deputy public prosecutor, were
in London on Saturday for wbat
police called a r "two-way
exchange" on the case.
THE LEX COLUMN
No banking on
inner reserves
Government | Talks on Costa Rica bond plans
likely to J BY peter montagnon, euromarket correspondent
support Job
compromise
By Philip Bassett, Labour
Correspondent
THE GOVERNMENT is likely
to support compromise pro- ,
posals providing temporary
part-time work for the long-
term unemployed which are to
be considered tomorrow’ by the
Manpower Services Commission.
The proposals are a sub-
stantial variant on the original
scheme put forward in the
Budget by the Chancellor of the
Exchequer m an effort to reduce
the numbers of long-term
unemployed. which are
expected to top lm this year.
The f!50m scheme will cover ;
about 100.000 of the long-term i
unemployed and is in addition j
to the training scheme which I
will be announced today by Mr
Norman Tebbit, Employment
Secretary. Mr Tebbit will
accept the new training initia-
tive proposed by the MSC. and
will publicly drop bis insistence
that those who refuse places on
it should in turn be refused
supplementary benefit.
Details of the compromise
over the Budget scheme which
will go before the MSC
tomorrow are spelt out in a
confidential memorandum from
Mr Geoffrey Holland, MSC
director.
They suggest that participants
in the scheme work part-time
for a wage set at the part-Ume
equivalent of the rate for the
job. They would also receive
training funded by the MSC.
Exactly how the week should
be divided has not yet been
agreed, but the most likely
option is that there should be
2l days’ pay to Zi days' benefit.
‘This is substantially different
from the scheme originally pro-
posed in the Budget, which
envisaged only the payment of
benefit, plus any expenses.
While the wage is less than
the four days’ pay such groups
as the Trades Union Congress
and voluntary organisations
were seeking, the TUC is un-
likely to oppose the 21-24 pro-
posal. if as is likely, it wins
government approval.
The MSC paper says the
scheme has ** considerable
attractions. " In particular, u
says - “The scheme would re-
present an attractive half-way
stage between long-term
unemployment and full-time
employment, particularly with
the option of further education
or training during the period in
which participants were vot
encaged in temporary work.
The MSC also believes the
scheme might prove attractive
to many sponsors, especially
local authorities; and that it
would be attractive to single
long-term unemployed people,
who comprise about two-thirds
of the total.
The scheme would be in
addition to the Community
Enterprise Programme.
MANAGERS of Costa Rica's ex-
ternal bond issues will meet in
i Geneva a week today to consider
proposals which could set a pre-
cedent for treatment of Euro-
bonds in international debt re-
scheduling.
The study group consists of
a banks' representative, a
lawyer and a representative of
Costa Rica. They suggest that
bond holders be asked to
exchange their paper for new
bonds which bear conditions
akin to those in the commercial
bank rescheduling.
But the proposals, which
have been 3greed Jn principle
bv the creditor banks and
Costa Rica, emphasise that such
an exchange should be volun-
tary.
The proposals, by a special
study group followed criticism in
the bond market of efforts by
creditor banks to draw bond
holders into arrangements to
reschedule Costa Rica's $3bn
l£1.73bn) foreign debt. The
sum is equivalent to 60 per cent
of the country's gross domestic
product.
The banks insisted that the
bond holders be included, to
prevent preferential treatment
of them, but the bond managers
objected on the grounds that
rescheduling of bonds went
against the principles, of the
securities market.
Costa Rica has five inter-
national bonds outstanding, for
a total, of about $130m.
Acceptance of the proposals
by the bond managers would
offer a solution to a problem
which has plagued the Euro-
markets since the Polish debt
dilemma emerged last year.
The solution for holders of
Polish bonds involved making
a distinction between corporate
holders of the paper — many of
which were banks — and private
individuals. The latter were to
be repaid on schedule, the
former to be subjected to toe
rescheduling.
Bond market bankers said
that was both invidious, because
it offered unequal treatment to
bond holders, and impracticable,
because it was very difficult to
establish the true identity of
bond holders in the Euromarket.
Since then, the stream of
corporate and sovereign re-
schedulings has continued and,
with more debt problems in
prospect, the debate over re-
scheduling bond issues ' has
become increasingly urgent. -
Even if the new proposals
were to be accepted by the bond
managers, they would still
present difficult technical prob-
lems.
Bonds, Page IS
TUC requests unions to pay fees earlier
BY PHIUP BASSETT, LABOUR CORRESPONDENT
THE TUC is formally request-
ing its 108 affiliated unions to
advance payment of their
affiliation fees by three months
because of current internal
cash-flow difficulties.
Last year the TUC was in
the red by £420.500. This year
there are suggestions that the
deficit could rise to £lm. The
main cause of the problems is
the effect on unemployment in
pushing down the memberships
of affiliated trade unions. At
present, individual unions pay-
47 .5p per member a year in
affiliation fees.
As a first step to improving
its cash flow, at the end of last
year the TUC asked constituent
unions to change their time of
paying affiliation fees from the
usual end of a quarter to the
beginning. While the positive
response of many unions to this
suggestion has helped the TUC,
it has not been enough.
Accordingly, the TUC has now
decided to ask ail its unions to
make this change. Since it may
require an alteration to TUC
rules it may have to be put to
Congress in September.
The TUC says that if this is
not done it will have to borrow
money to meet its current costs.
In the Jong run these will be
more expensive for affiliated
unions since they would have to
cover the costs of interest
charges.
The TUC also believes that
if unions do not comply with
this request, then affiliation fees
— which provided an income of
£3.073,728 in 1980. according to
the TUCs last accounts— will
have to be increased again.
At present the TUC is hoping
to be able to make no request to
Congress for an increase, though
it will depend on the unions’
response to this initiative.
The TUC “ inner cabinet.” its
finance and general purposes
commit tee, will today consider
further the thorny question of
the structure of the TUC
general council. Today’s meet-
ing. and the council's on Wed-
nesday, will be among the final
sessions for preparing a report
on the issue to Congress.
Today's meeting will be told
how small unions in .the TUC
responded to the motion passed
by last year’s Congress, which
would give general council
seats automatically to those
SDP credit scheme for industry
BY jOHN ELUOTT, INDUSTRIAL EDITOR
AN INDUSTRIAL credit scheme
to provide cheap long-term
finance for industrial projects
which meet criteria set down
for a Liberal-Social Democratic
Alliance Government was pro-
posed at the weekend by an
SDP study group.
The aim would be to back
projects which “contributed to
the restructuring of industry"
and possibly' those boosting
regional development.
They might include advanced
manufacturing systems, new
products, or formation of
marketing and distribution
facilities abroad.
The proposal is in an SDP
“ green paper " published at the
weekend.
This suggests creation of a
Ministerial committee on indus-
try headed by the Prime
Minister, served by a secretariat
of civil servants and business-
men, supported by an advisory
panel on industrial policy made
up of 10 or 12 senior indus-
trialists.
Five-year medium-term loans
would be provided at a rate 5
percentage points below current
interest rates. The paper
suggests that a subsidy of £l00m
a year for five years would
enable £2bn of cheap loans to
be provided, protecting industry
from the impact of the high in-
terest rates.
Mr Bill Rodgers, the MP who
led the working party that pro-
duced the report, envisages
£300m devoted to this each year.
Total cost of proposals in the
report has been provisionally
costed at £650tn to £750 m. on
top of the Industry Depart-
ment's current £2bn budget.
Details, Page 5
Falklands Continued from Page
The Argentine general staff
announced at the weekend
that the British ice patrol ves-
sel. HMS Endurance, and
British troops landed from
two helicopters early on
Saturday afternoon, were
poised to capture the tiny
Argentine naval outpuost of
10 men on Morrell bland in
the Southern Thule group of
the South Sandwich Islands.
The Argentine navy had
been in occupation of the
rocky outcrop since 1976.
John Wyles in Luxembourg
writes: Britain came under
strong pressure last night
from its EEC partners, led
by West Germany, to agree to
II ft the Community’s trade
sanctions against Argentina.
Hr Francis Pym, the
British Foreign Secretary,
argued with other EEC
Foreign Ministers in favour
of continuing the trade
embargo until Argentina had
formally announced and end
to hostilities. But Herr Hans
Dietrich Genscher, the West
German Foreign Minister, is
thought to have pressed hard
for the embargo to be lifted
now
Commons inquiry into property agency
BY ANDREW TAYLOR
A PARLIAMENTARY investi-
gation into alleged “fraud and
irregularities ” at the Property
Services Agency — the body
-responsible for the acquisition
and management of government
property — starts today.
An independent inquiry into
affairs at the agency, ordered
by Mr Michael Heseltine,
Environment Secretary. is
already under way.
The investigation by the
Commons Public Accounts Com-
mittee has been triggered by a
memorandum from the Comp-
troller and Auditor General
w’/ifh refers to a number of
disturbing cases where civil
servants have either been con-
victed or charged with
dishonesty.
In the separate investigation
Mr Heseltine has commissioned
Sir Geoffrey Wardaie. a former
second permanent secretary at
the Environment Department,
together with a senior partner
at Touche Ross, chartered ac-
countants. “ to investigate the
circumstances of recent cases. oE
fraud and corruption in the
Property Services Agency."
When he announced that In-
quiry, Mr Heseltine told the
Commons: “The small number
who have been found guilty of
fraud or corruption have
brought discredit both on them-
selves and on the Government’s
services generally. I am looking
to the inquiry to give a realistic
perspective to this matter and
to suggest what changes In pro-
cedures or management might
be desirable."
The investigations come in
the wake of several recent court
cases which have involved
agency staff in allegations of
corruption. Earlier this year a
former agency professional and
technical officer was found
guilty at the Old Bailey of
taking bribes from maintenance
contractors. Other court cases
have involved members of
agency staff at Plymouth. Devon
and Donnington, Shropshire.
The Metropolitan Police
Fraud Squad has also been in-
vestigating allegations of corrup-
tion which may involve London
staff of the agency. The in-
vestigations, which began in
197 6. are continuing.
The Public Accounts Com-
mittee may decide to hear In
private some of the evidence
due to be given today and at a
further session of the committee
planned for Wednesday. This
is because material discussed
might prejudice any fumre
court hearings.
Mr Monty Alfred, agency
chief executive, who is due to
be a witness at today’s select
committee hearing, has become
increasingly concerned at pub-
lic criticism of the government
agency.
He says : “The assertion that
the agency is an organisation
of considerable inefficiency and
has been over the last decade
hardly squares with the facts.
Since its formation in 1972,
although the workload overall
has hardly changed, the num-
bers employed at the agency
have fallen from 45.000 to
30.000.
“ Any organisation can
become a victim of dishonest
staff and its procedures and
practices put at risk, accord-
ingly. It is for this reason that
the Secretary of State set up an
Independent iquiry."
unions with more than 100,000
members.
Following consultation with
the small unions it is under-
stood that they have in the main
decided in favour of the " single
list ” option, which would mean
their voting for 11 general
council members from a single
list, regardless’ of trade group,
in addition to the so-called
automaticity proposals.
This now seems likely to be
the basis of the TUC’s report
to Congress. But it will be
challenged by a motion from the
dinars arguing for a rejection
of last year’s resolution and a
reanrn to the status quo ante!
This move- may now well
receive enough support to
secure victory.
Weather
London, S.W„ S.E., E. Anglia,-
Midlands, iY. Wales, N.W.
Showers, some bright periods.
Max i&C (86 F).
N. England, N. - Ireland, S.W.
Scotland, tsie of Man
Rain at times, some bright"
intervals. Max 16C (61F).
S.W. England, Chan Islesi S.
Wales
Cloudy, heavy showers, some
sunny intervals. Max 18C (64F).
Glasgow, Cent Highlands, N.W.
Scotland
Mainly dry, some sunny
intervals. Max 15C (59F).
Elsewhere
Mainly dry, cool and cloudy.
Outlook
Showers, bright intervals. 1
temperatures near normal. .
WORLDWIDE
— - — i
!“«Jay i Y'day
mi-Jdjy midday
•C “F ' 'C "F
Aiacdo F 14 57 L. Ang.f C 16 5t
Algiers S 28 32 Ui»mbg. S 18 W
Amsdm. F 17 63 Luxor F 40 104
Athens S 27 81 Madrid F 28 82
Bahrain S 33 91] Majorca S 28 82
Barclna. F 26 79iMalaoa S. 26 62
Beirut — — —I Malta F 32 90
Ballast C 17 63|M-chstr C 15 59
Belard. S 23 73'Mclbne. C 11 52
Berlin C 17 S3 M«. C.f — — —
Biarrii* F 25 79 Mum , t S 26 79
Bmqhm. C 18 64 1 Milan. F 25 77
Blsckol. C 15 591 Montrl.f C 13 55
Bord*. F 24 75 (Moscow C 15 .55
Boulgn. S 16 61 Munich F IB E4 .
Bristol C 18 84 Nairobi C 24 75
Brussels F 18 « Naples F 25 77
Budosi F 23 73 1 Nassau — — —
Cairo S 33 SliNwcstl C 14 57
Csrd.rf S 19 66 N Vorfcf S 15 64
Castj'caS 21 70!Nicf F 24 75
Cepe T. F 24 75 ;nicos.j — — ■ —
Ctncot. f C U 57 ; Oporto C 17 63
Colojite ft 10 63; Oslo S 18^64
Cpnhgn . R 13 64|p jn s F 20 68
There is a great deal of com-
fort in having something -tucked
away up your sleeve. Bankers
certainly like indulging in a
little sleight-of-hand when they
produce their accounts— nothing
that will’ seriously deceive, you
understand, but only a modicum
of prestidigitation to impress
the audience. Tbe right of Euro-
pean banks to maintain hidden
reserves is perpetuated by the
draft EEC Directive on bank re-
porting. which- allows loans and
advances to be undervalued by
up to 5 per cent
Such concessions are enjoyed
by banks In most European
countries, though in the UK the
dispensation is limited to a
relatively small number of
merchant banks, mostly those
which are members of the
Accepting Houses Committee,
and to the dozen or so discount
houses. Hidden reserves are
not, however, permitted in the
U.S. and the increasing interna-
tionalisation of the operations
of banks is changing the whole
approach to -the question. The
most important users of bank '
'accounts are increasingly be-
coming other banks — and they
are unlikely to be satisfied with
a quality of financial reporting
which has been designed to calm
the nerves of unsophisticated
local depositors.
So it is that in the UK a
select committee of the House
of Lords has come out against
secret reserves. And even in
Switzerland, tbe bastion of ;
banking privilege and secrecy,
the Swiss Banking Commission
has been far from pleased at
the way in which banks have
used their secret reserves to
cover up the effects of financial
blunders.
Confidence
The argument for lhe exist-
ence of hidden reserves is that
they provide a cushion for a
bank in hard times. A bank re-
lies on lhe confidence of de-
positors. which might be shaken
if large exceptional losses were
reported. Depositors, it can be
argued, feel more comfortable
in the knowledge that a bank
has something in reserve to
draw upon.
But such an approach immedi-
ately renders the accounts use-
less for more precise purposes,
such as the valuation of the
bank's shares. And it is mora
than a little paradoxical tha-t
banks should seek to impress
their customers by showing
themselves to he less rich than
they really, are.
. There is also the question of
how such hidden reserves
should be accumulated. Unless
they can be created out of cap-
ital profits or exceptional in-
come of seme kind, they will
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have to be built up by the di-
version of part of each years
profits. Because - of this, the
maintenance of a balance sheet
cushion also has the effect or
giving a bank’s management the
opportunity to manipulate the
profit and loss account
How this is done varies
between banks. There is a lot
to be said for the approach of
several of the private accepting
houses, such as Baring Brothers,
which simply shows as profit
the amount needed to cover the
dividend. Thus the Baring
profit and Joss account for 1981
consists of just . two items —
profit after tax and transfer to
inner reserves £Im, dividends
£lm- At least this has the
merit of being transparently
unhelpful.
But the „ listed accepting
bouses follow a different policy,
and mu Samuel, for instance,
has just published banking
profits of £12. 58m against
£10.68m for the year to March
1682. Such precise figures
could mislead users of the
accounts into thinking they
have more meaning than they
haye. In fact, the rule is that
the disclosed figures reflect the
trend of the true results —
although not tbe magnitudes.
A third, still more artificial
disclosure policy is possible, in
which a smooth, gently rising
earnings trend is manufac-
tured from the volatile raw in-
gredients. This appears to have
been the approach of some of
the Swiss banks, so that Credit
Suisse’s, earnings profile was
barely dented by the Chiasso
loses in 1977. And more
recently Swiss Volksbank de-
clared higher profits for 1980
despite bearing the burden of
customers’ losses on silver deal-
ings, although by 1981 the losses
had become so large, and the
general banking climate so
difficult, that it had finally
to report a sharp drop in pub-
lished earnings.
Many bankers would no doubt
argue that these distortions are
a price worth paying for the
«ke of public confidence. But.
to an increasing extent
are no longer able to hide rhei r
hidden assets. They no lonse-
deal with just local depositors,
but also with other banks
around the world—' who run
balance-sheets through the. t .
computers. If the pubusne*.
balance-sheet rtrios arc no:
good enough, then vague .au-
about secrei reserves— which
mav or mav not be there — is
cot going to cut roach ice m
the -international credit
markets.
This leads to the phenomenon
of the repeated release or inner
reserves into the published
balance-sheets. Baring Brothers,
for instance, has taken to Trans-
ferring £5m a year, and many
other UK accepting houses have
done 'the same.
A similar policy has »een
adopted by that Far Eastern
advocate of hidden reserving,
the Hongkong and Shanghai
Banking Corporation, where
HKS400ra was shifted last year
out of the reputedly vast secret
reserves into published share-
holders’ funds. Eceause of this
recycling process, so me analysis
believe that the Hongkong
Bank's inner reserves arc in
fact comparatively small.
Lacklustre
So we have a decidcdlv
curious situation in which many
banks are tucking more profiJ-s
away into their inner reserves
than they can afford to lea\e
there. The cushioning effect of
the hidden assets against major
disasters is therefore only
limited — and the main purpore
of the maintenance of such
reserves has come to be the
habitual manipulation of earn-
inns.
Such distortions are againyt
the interests nf external users of
accounts, and the question inusi
he seriously asked whether they
do the bank* themselves any
good. In the UK the two group;
which dine to rhe “privilege"
of exemption from full dis-
closure requirements. lhe
merchant banks; and the dis-
count houses, have produced
very lack-lustre performance:,
in the stock marker over the
years.
The UK clearing banks and
the UJS. banks do not appear to
have been notably harmed by
full disclosure. There is a strong
ease for arguing that the need
to publish true profits sharpens
the competitive attitude of a
hank and encourages the man-
agement to think more carefully
about exposure to risk. And
judging by the public catalogue
of mishaps in Swiss banking,
secrecy is in any case no longer
something which can be su.v
tained by means of financial
reporting privileges.
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